Doubleentry bookkeeping

Zaheer Younis works in rhc accounting department of a trading company: 'I began my career as a bookkeeper. Bookkeepers record the company's daily transactions: sales, purchases, debts, expenses, and so on. F.ach type of transaction is recorded in a separate account - rhe cash account, the liabilities account, and so oil. Double-entry bookkeeping is a system that records two aspects of every transaction. Every transaction is both a debit - a deduction - in one account •and A corresponding credit an addition - in another. For example, if a company buys some raw materials - the substances and components used ro make products - that it will pay for a month later, it debits its purchases account and credits the supplier's account. If the company sells an item on credit, it credits the sales account, atid debits rhe customer's account. As this means rhe level of rhe company's stock - goods ready for sale - is reduced, ir debits the stock account. There is a corresponding increase in its debtors - customers who owe money for goods or services purchased - and the debtors or accounts payable account is credited. Each account records debits on the left and credits on the right. If the bookkeepers do their work correctly, the total debits always equal rhe total credits.'

BrE: debtors; AmE: accounts receivable BrE: creditors; AmF: accounts payable BrE: stock; AmF: inventory

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