WASSCE SHS
Every transaction is entered twice. One account receives value. Another account gives value. The books stay in balance because both sides are recorded.
An account has a debit side and a credit side. For an asset, a debit increases it and a credit decreases it. For a liability or for capital, a credit increases it and a debit decreases it. Expenses are debited, because they reduce profit and therefore capital. Income is credited. The practical test is to name the two accounts and decide which receives and which gives. The account that receives is debited. The account that gives is credited.
Bought furniture and paid by cheque: the furniture account receives an asset, so it is debited. The bank account gives the money, so it is credited. Sold goods for cash: cash is debited, sales is credited. The narration names the other account, so a reader can see the pair. A trial balance lists the balances and checks that total debits equal total credits. It does not prove that you chose the right accounts. It proves that you entered each amount twice.
Name both accounts. A single entry is not double entry. State debit and credit, not only the names. The amount appears on both. A narration that says "furniture" in the bank account and "bank" in the furniture account shows the pair. If you reverse them, the trial balance may still agree, so the marker has to see the direction. Receiving is the debit.
These are practice questions in the style of the paper, with a model answer and a mark scheme. They are not a promise of what your paper will ask.
3 marks
A business buys furniture for 3,000 cedis and pays by cheque. State the account to debit, the account to credit, and the amount in each. (3 marks)
Debit the furniture account with 3,000 cedis. Credit the bank account with 3,000 cedis.
2 marks
Goods are sold for 800 cedis cash. State the double entry. (2 marks)
Debit cash 800 cedis. Credit sales 800 cedis.
2 marks
Explain why a trial balance can agree even though a transaction was entered in the wrong accounts. (2 marks)
The same amount was still debited and credited, so the totals match. The trial balance does not test whether those were the correct accounts.
More questions on this topic are inside GLearn, marked as you answer, with the reason written out. The first ones need no account.
Practise Financial Accounting freeThe account that receives value. When furniture is bought by cheque, furniture receives the asset and is debited. Bank gives the money and is credited. Both entries are for the same amount.
That the debit balances equal the credit balances, so each amount was entered twice. It does not prove you used the right accounts. A reversed entry can still leave the totals equal. All WASSCE Financial Accounting past questions