Double Entry Book Keeping - JSS1 Business studies Past Questions and Answers - page 2

The primary objective of double entry bookkeeping is to ensure accuracy and completeness in recording financial transactions while maintaining the balance of the accounting equation.

An increase in assets is recorded by making a debit entry in the respective asset account. For example, when purchasing inventory for cash, the inventory account is debited.

A decrease in liabilities is recorded by making a debit entry in the respective liability account. For instance, when making a payment towards a loan, the loan payable account is debited.

Expenses are recorded by making a debit entry in the respective expense account when they are incurred. For example, when paying for utilities, the utilities expense account is debited.

Double entry bookkeeping ensures accuracy by requiring every transaction to have equal and opposite effects in at least two different accounts, thereby maintaining the balance of the accounting equation.

Balancing in double entry bookkeeping refers to the equal and opposite effects of financial transactions in at least two different accounts, ensuring that the accounting equation remains balanced at all times.

When an asset is sold, the asset account is credited to reflect the decrease in the asset's value or removal from the company's possession.

When liabilities are incurred, they are recorded by making a credit entry in the respective liability account. For example, when borrowing money from a bank, the loan payable account is credited.