Debit and credit entries

Double-entry method

Every business transaction affects two or more accounts. The double-entry method takes its name from the fact that equal debit and credit entries are made for every transaction.

If only two accounts are affected, one account is debited, and the other account is credited for the same amount.

For example, as in the purchase of land for cash: account Land is debited, account Cash is credited.

If more than two accounts are affected by a transaction, the sum of the debit entries must be equal to the sum of the credit entries.

For example, the Robert Real Estate Agency purchased a building for a price of $12, 000. $12, 000 debit to the asset account, Building, is exactly equal to the total of the $5, 000 credit to the Cash account plus $7, 000 credit to the liability account, Accounts Payable.

Since every transaction results in an equal amount of debits and credits in the ledger, it follows that the total of all debit entries in the ledger is equal to the total of all credit entries.

Debit and credit entries

An amount recorded on the left or debit side of an account is called a debit, or a debit entry; an amount entered on the right or credit side is called a credit, or a credit entry.

Accountants also use the words debit and credit as verbs. The act of recording a debit in an account is called debiting the account; the recording of a credit is called crediting the account.

A debit to an account is also sometimes called a charge to the account; an account is debited or charged when an amount is entered on the left side of the account.

3. Account correspondence is the interconnection of the accounts which appears as a result of recording transactions on accounts by means of double entry method.

Task 2: Complete the vocabulary on the text

1.	подвійний запис
2.	рахунок
3.	проводка
4.	відображення операцій на рахунках
5.	проводка по дебіту	debit entry
6.		credit entry
7.		to affect
8.		an equal amount
9.		by means of
10.	дорівнює
11.	дебетувати, вносити у дебет

Task 3: Match the words to their definitions

1.	debit	a.	the right-hand side of an account
2.	transaction	b.	the act of recording an item, such as a commercial transaction, in a journal, account, register, etc
3.	entry	c.	a simple book-keeping system in which transactions are entered in one account only
4.	account	d.	the left side of an account
5.	single-entry book-keeping	e.	a book-keeping system in which any commercial transaction is entered as a debit in one account and as a credit in another
6.	double-entry book-keeping	f.	the act of obtaining and paying for an item or service
7.	credit	g.	a statement of monetary transactions with the resulting balance
8.	accountant	h.	the theory and practice of keeping and inspecting accounts
9.	accounting	i.	a person whose job is to inspect or keep accounts
10.	accountancy	j.	the system that measures business activities, processes that information into reports, and communicates these findings to decision makers

Task 4: Read the following collocations with the word account, try to remember them

1. on account – в кредит, з частковою оплатою, за рахунок майбутніх платежів

2. account for – пояснювати, надавати звіт; нести відповідальність

3. by all accounts – на загальну думку

4. call to account – вимагати пояснення, виносити догану

5. of no account – незначний, неважливий

6. of some account – користуватися певним авторитетом

7. on one’s account – на чийсь рахунок

8. on account of – (прийм.) через (щось), внаслідок (чогось), з причини

9. on no account – ні в якому разі, на за що

10. take into account – брати до уваги

11. put (take) smth to good account – використовувати щось у своїх інтересах

Match each word in colymn A with its definition in column B

1.	on account	a.	unimportant
2.	account for	b.	on one’s behalf
3.	by all accounts	c.	serve as or provide am explanation for
4.	call to account	d.	because of
5.	of no account	e.	require an explanation from
6.	of some account	f.	important
7.	on one’s account	g.	in everyone’s opinion
8.	on account of	h.	consider
9.	on no account	i.	under no circumstances
10.	take into account	j.	use smth fully and profitably
11.	put (take) smth to good account	k.	to be paid for later

Use the words from column A to fill in the blanks

1. … … … she was a very clever young lady.

2. If you buy something … …, you take it away with you and pay for it at a later date.

3. Before making an important decision you should … … … all the details.

4. I lost my job … … being irresponsible.

5. It is … … …, in other words it doesn’t matter to me.

6. This … … her absence.

7. The accountant must make a mistake in the financial reporting … … ….

8. You must … them … … for the violation of obligations (порушення зобов’язань).

9. Take it easy, this problem seems to be … … ….

Task 5: Read and translate the following extract about the history of accounting. And the double-entry system in particular. Speak what if there is something new you have learnt from the text

Accounting has a long history. Some scholars claim that writing arose in order to record accounting information. Account records date back to the ancient civilisations of China, Babylonia, Greece and Egypt. The rulers of these civilisations used accounting to keep track of the cost of labour and materials used in building structures like the Pyramids.

Accounting developed further as a result of the information needs of merchants in the city-states of Italy during the 1400s. In that commercial climate the monk Luca Pacioli, a mathematician and friend of Leonardo do Vinci, published the first known description of double-entry book-keeping in 1494.

The double-entry accounting system – in which for every “debet dare” (Lat.) there is “debet habere” (Lat.) - has evolved to the point where it is very much like the present day system. Debet dare and debet habere are Latin terms meaning “should give” and “should have” respectively.

Task 3: 1d 2f 3b 4g 5c 6e 7a 8i 9j 10h

Task 4: 1k 2c 3g 4e 5a 6f 7b 8d 9i 10h 11j

Речення: 1. by all accounts 2. on account 3. take into account 4. because of 5. of no account 6. accounts for

Дата добавления: 2015-07-20