How do we write a transaction into the ledger so that both sides are recorded?
Record transactions in T-accounts, showing the date, the other account and the amount on each side
A simple answer to the N(A)-Level Principles of Accounts outcome on T-accounts. How a T-account is laid out, how to enter the dual effect of a transaction, and how to name the other account in each entry.
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What this dot point is asking
SEAB wants you to record transactions in T-accounts, with the right side, the date, the name of the other account, and the amount. This is double entry put into practice in the ledger. The central insight is that every transaction is written twice, once on the debit side of one account and once on the credit side of another, and each entry is labelled with the name of the account on the opposite side.
The answer
The layout of a T-account
Each account looks like a capital "T". The account name sits at the top. The left side is for debits and the right side is for credits. Each line shows three things:
| Date | Details (other account) | Amount \$ |
The "details" column is important: it names the other account in the double entry, so anyone reading the ledger can follow the entry back to its pair.
Recording the dual effect
For every transaction:
- Decide the two accounts affected.
- Decide which is debited and which is credited (using the element rule).
- Enter the amount on the debit side of one account and the credit side of the other.
- In each entry, write the name of the other account in the details column.
Naming the other account
If cash is debited because the owner paid in capital, the entry in the cash account reads "Capital" in the details, and the entry in the capital account reads "Cash". This cross-referencing is how a marker checks the double entry is complete.
Examples in context
Example 1. A credit purchase later paid. A business buys goods on credit from a supplier, so purchases is debited "Supplier" and the supplier is credited "Purchases". When the bill is paid by cheque, the supplier is debited "Bank" and bank is credited "Supplier". Following the details column shows the whole story: the goods came in, then the debt was settled, each step recorded twice.
Example 2. Owner introducing equipment. Instead of cash, an owner brings a personal printer worth \300$ into the business. Equipment is debited "Capital" (an asset gained) and capital is credited "Equipment" (the owner's stake rises). Even though no cash moves, the transaction is still recorded twice in T-accounts, which shows that double entry is about value, not just cash.
Try this
Q1. In the bank account, a payment for insurance is recorded. On which side does it go and what is written in the details? [2 marks]
- Cue. On the credit side (bank, an asset, falls), with "Insurance" written in the details column.
Q2. A business receives \900$ cash from a customer who owed money. Show the two entries. [2 marks]
- Cue. Debit Cash \900\ (details "Cash").
Q3. Explain why the details column never names the account you are writing in. [2 marks]
- Cue. It names the other half of the double entry so the pair can be traced; naming the same account would give no useful cross-reference.
Exam-style practice questions
Practice questions written in the style of SEAB exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Original6 marksRecord these transactions in the cash account and the matching accounts: (1) owner pays in \3\,000\ cash; (3) cash sale \500$. Show the entry on the correct side of each account with the name of the other account.Show worked answer →
Cash account:
- Debit side: Capital \3,000\.
- Credit side: Purchases \700$.
Capital account: credit side, Cash \3,000$.
Purchases account: debit side, Cash \700$.
Sales account: credit side, Cash \500$.
Each entry names the other account (so the cash debit from capital reads "Capital"), the dates would normally be shown, and every amount appears on both of its two accounts.
What markers reward: correct sides, naming the other account in each entry, and showing each transaction twice (once in cash and once in the matching account).
Original5 marksA business pays \1\,000\ by cheque. Show these two transactions in the bank account and in the rent and equipment accounts.Show worked answer →
Bank account (credit side, because money goes out): Rent \1,000\.
Rent account (debit side): Bank \1,000$.
Equipment account (debit side): Bank \2,500$.
Rent is an expense and equipment is an asset, so both increase on the debit side; the bank (asset) falls, so both entries are on the credit side of bank.
What markers reward: both payments shown on the credit side of bank, the matching debits in the rent and equipment accounts, and each entry labelled with the name of the other account.
Related dot points
- State and apply the rules of debit and credit for each of the five elements
A simple answer to the N(A)-Level Principles of Accounts outcome on debit and credit rules. What debit and credit mean, the rule for each of the five elements, and the DEAD CLIC memory aid for recording increases.
- Balance off ledger accounts and bring down the balance, identifying it as a debit or credit balance
A simple answer to the N(A)-Level Principles of Accounts outcome on balancing accounts. How to total each side, insert the balance carried down, bring it down for the next period, and say whether it is a debit or credit balance.
- Classify accounts into the five elements: assets, liabilities, owner's equity, income and expenses
A simple answer to the N(A)-Level Principles of Accounts outcome on the five elements. What each element means, how to decide which element an account belongs to, and why this choice drives the debit and credit rule.
- Post from the books of prime entry to the sales, purchases and general ledgers
A simple answer to the N(A)-Level Principles of Accounts outcome on posting to the ledgers. The three ledgers, how journal totals and individual entries are posted, and why the ledger is divided this way.