Eve 'n You can
Understand Double Entry Accounting
TOPS Software: So easy even a caveman can do
it!!!
Those cavemen were on to something.
Cavemen created methods that are used EVEN TODAY to educate the
average user.
Cavemen are never thought of for "Not seeing the forest for
the trees"!!!
They saw the trees,
Memorized their patterns,
& later sometimes drew the trees on cave walls...
So that others would understand the trees too.
And what was this crazy amazing little known idea???
I just told you silly!!!
They used DRAWINGS!!!
See, you're not seeing the forest for the trees yourself huh???
*blink blink*
Don’t cry, I can help you.
Get a piece of paper & a pen.
Write down what I say.
TOPS ALWAYS USES Double Entry Accounting:
For every DEBIT there MUST be an equal and offsetting CREDIT in
the same accounting period. Unbalanced entries cannot be posted!
One way to determine where the adjustments have to go is to do
what is called a T Account. This sometimes helps to understand the
effect of a transaction on the General Ledger accounts. You do this
using the following steps.
1) On the paper make a big "T" picture !!!
2) On the left side mark it Debit
3) On the right side mark it Credit
4) List on the left, the account that needs to be changed (positive
or negative)
5) Think about the effect of the adjustment and if one is increased
what will be decreased and list that account on the right side.
6) Some adjustments may have more than one account that will need
to be hit by a particular adjustment.
For example, a check for $1000 is credited (reducing the bank balance)
This check may pay a vendor for regular lawn cutting ($750), sprinkler
repairs ($150), and replacing a plumbing nozzle ($100). So the actual
payment will show as a credit to cash operating ($1000) and debit
to lawn, sprinkler and plumbing as shown below. As long as they
all balance in the same accounting period, this is correct.
When you’re done your drawing should look like this:
If not… do it again.
Good Bye Cavemen!!!
Disclaimer : We at TOPS Software mean no disrespect to actual Cavemen,
Cave Dweller, Cavewoman, Cro-Magnon, Cro-Magnon race, Homo Sapiens,
Human, Paleolithic Man, Prehistoric Caveman, Troglodyte, etc...even
if you see us laughing at the sight of you.
by Eve DuBose,
Support Technician
|
