50 focused guides with practical examples and source references.
An owner introduces capital when personal money or property becomes a resource of the business without creating an ordinary customer sale. In a sole proprietorship, debit the asset received and credit the…
Read guide · 5 minCorrect a personal purchase in a proprietor’s books by moving it out of business expenses and into drawings, while preserving the original payment. If the amount must be repaid by an employee, director or…
Read guide · 5 minA cash sale increases cash and records sales revenue, with any tax collected credited separately to the relevant tax liability. If the customer pays a rounded amount, post the small difference to a…
Read guide · 5 minRecord a credit sale by debiting the customer receivable and crediting sales and any applicable output tax. When payment arrives later, debit the receiving bank or cash account and credit that same…
Read guide · 5 minMoney received before the business has earned the sale should normally be tracked as a customer advance or other appropriate obligation. Debit bank when the money arrives and credit the advance account.…
Read guide · 5 minAdjust a customer advance by debiting the advance liability and crediting the customer receivable created by the sales invoice. This applies money already received to a bill now due. It should clear the…
Read guide · 5 minA credit purchase records what the business has received and the amount owed to the supplier before payment. Debit inventory, purchases, an expense or an asset according to the item acquired; debit…
Read guide · 5 minAn advance paid before a supplier delivers goods or earns its fee is generally recorded as an asset representing the business’s right to future supply or repayment. Debit Supplier advances and credit Bank.…
Read guide · 5 minWhen goods are returned to a supplier, reduce the recognised purchase or inventory amount and adjust the supplier balance using supported return and credit-note records. If input tax must be reduced, record…
Read guide · 5 minA customer return usually requires two assessments: how the original sale and customer balance change, and what value, if any, the returned goods bring back into inventory. Record the accepted financial…
Read guide · 5 minRecord an approved settlement discount by debiting the appropriate discount or revenue-adjustment account and crediting the customer receivable, alongside the actual bank receipt. First establish what the…
Read guide · 5 minA discount received on settlement reduces the amount the business must pay a supplier. Debit the supplier payable for the liability being cleared, credit bank for the actual payment and credit the…
Read guide · 5 minRecord a bank charge by debiting the relevant bank-fee expense and crediting the bank account from which it was deducted. Where a supported invoice includes recoverable GST, separate the eligible tax from…
Read guide · 5 minUse a payment-gateway clearing account to connect gross customer collections with the smaller amount deposited into bank after fees and other adjustments. Record sales from the underlying transactions, then…
Read guide · 5 minRecord bank interest as interest income rather than sales or owner capital. Debit bank for the amount credited, debit a supported tax-deducted receivable where applicable and credit gross interest income.…
Read guide · 5 minA business loan receipt normally increases bank and creates a borrowing liability. Debit Bank and credit the appropriate loan account for the supported amount borrowed. The receipt is financing, so it…
Read guide · 5 minSplit each loan instalment using the lender’s supported allocation between principal, interest and any additional charges. Debit the loan liability for principal, debit interest expense or the appropriate…
Read guide · 5 minWhen an expense has been incurred but the supplier’s bill has not arrived, record a supported accrual: debit the relevant expense and credit an accrued-expense liability. The estimate should relate to goods…
Read guide · 5 minFor an annual subscription that provides service over twelve months, recognise the unused benefit as a prepaid expense and release it to expense over the service period on a supported basis. The payment…
Read guide · 5 minIf income has been earned under the applicable recognition policy but the invoice has not yet been issued, debit an appropriate accrued-income or unbilled-revenue asset and credit revenue. When the invoice…
Read guide · 5 minService fees received before the related work is earned should be tracked as unearned income or another appropriate customer obligation. Debit bank for the receipt and credit the liability, with any…
Read guide · 5 minA refundable deposit is generally an asset for the payer and a liability for the recipient while the contractual right to repayment remains. Record the payment or receipt separately from rent, sales or…
Read guide · 5 minRecord an employee advance as a recoverable asset until the employee provides an approved expense settlement or returns the money. Debit Employee advances and credit bank or cash when funds are issued. On…
Read guide · 5 minWhen an employee pays a supported business cost personally, recognise the cost and the amount owed to that employee. Debit the appropriate expense or asset and credit Employee reimbursement payable. When…
Read guide · 5 minRecognise salary cost for employees’ services in the relevant period and record the unpaid obligation, even when bank payment will happen later. A payroll journal should distinguish gross salary, employee…
Read guide · 5 minRecord a qualifying business asset at its supported acquisition cost, including directly attributable installation costs needed to make it capable of operating as intended. Separate recoverable taxes and…
Read guide · 5 minA monthly depreciation entry normally debits depreciation expense, or another appropriate cost account, and credits accumulated depreciation. It allocates a depreciable asset’s supported amount over its…
Read guide · 5 minWhen a business asset is sold, remove its recorded cost and related accumulated depreciation, recognise the sale proceeds and record the resulting gain or loss. Separate any output tax from the amount used…
Read guide · 5 minWrite off an uncollectible receivable by crediting the customer balance and debiting bad-debt expense or an existing loss allowance, as appropriate under the applicable accounting framework. Identify the…
Read guide · 5 minWhen money is recovered after a receivable was written off, record the actual receipt against an appropriate recovery account or reinstate and clear the receivable through a controlled process. Link the…
Read guide · 5 minCreate a provision when the applicable recognition requirements establish a present obligation with a probable outflow and a reliable estimate. Debit the appropriate expense or asset cost and credit the…
Read guide · 5 minRecord stock lost through damage or theft by removing the supported inventory value and recognising the appropriate loss. First distinguish goods that are gone or unusable from goods that can still be sold…
Read guide · 5 minWhen a proprietor takes business goods for personal use, record the inventory reduction and charge the appropriate drawings account rather than an operating expense. Use the supported stock cost for the…
Read guide · 5 minRecord genuine free promotional samples by moving their supported stock cost into an appropriate promotion expense and reducing inventory. Review the related GST treatment separately. A sample issue should…
Read guide · 5 minFor a transfer between two bank accounts belonging to the same business, debit the receiving bank and credit the sending bank. The transfer changes where business money is held; it does not create sales,…
Read guide · 5 minWhen cash already belonging to the business is deposited into its bank account, debit Bank and credit Cash on hand. The deposit changes the location of money; it does not create another sale. Establish…
Read guide · 5 minA bank withdrawal for business cash use normally debits Cash on hand and credits Bank. The withdrawal itself is not an expense; the expense arises when cash is subsequently spent on a supported business…
Read guide · 5 minA cash-and-bank contra entry records a supported internal movement between the business’s own cash and bank accounts. Common examples are cash deposited into bank, cash withdrawn for office use and…
Read guide · 5 minA reversing entry cancels a selected prior-period adjusting entry at the start of the next period so the ordinary transaction workflow can proceed without duplicating the adjustment. It is often useful for…
Read guide · 5 minCorrect a wrong-account posting by comparing what was recorded with what should have been recorded, then posting only the supported difference or a controlled reversal and replacement. Preserve the original…
Read guide · 5 minClear a suspense account by identifying the underlying transaction and moving the amount to its supported final account. Keep the original receipt or error reference and evidence for the reclassification. A…
Read guide · 5 minPost opening balances from a verified closing trial balance at a defined migration date, with supporting customer, supplier, inventory and asset detail. The opening entry should reproduce the business’s…
Read guide · 5 minClosing stock reduces the cost of goods attributed to the period because goods still held have not yet been sold or consumed. Under a periodic approach, the closing-stock adjustment recognises the supported…
Read guide · 5 minAn internal transfer between branches of the same business moves resources within the entity. Record the sending and receiving effects through stock, bank or branch-current accounts as appropriate, and…
Read guide · 5 minWhen a foreign-currency payable is settled, compare the supported rupee carrying amount of the liability with the rupee amount paid for that currency. Record the resulting exchange difference separately…
Read guide · 5 minRecord a partner’s supported contribution in an LLP by debiting the cash, bank or other recognised resource received and crediting that partner’s contribution or capital account. Keep each partner’s balance…
Read guide · 5 minRecord a partner’s personal withdrawal against the appropriate partner drawings, current or capital account according to the agreement and ledger structure. Credit bank or cash for the actual payment. A…
Read guide · 5 minWhen a company validly declares a dividend and a present obligation arises, record the distribution against the appropriate retained-earnings or distribution account and credit Dividend payable. Later…
Read guide · 5 minA compound journal entry records one supported event across more than two accounts, with total debits equal to total credits. It is useful when a purchase, collection or payroll event contains several…
Read guide · 5 minA useful ledger narration explains what happened, why the selected accounts were used and where the supporting evidence can be found. Include the business purpose, relevant period and key document…
Read guide · 5 min