Chapter 1

Why do we have double entry accounting? Why do we put in everything twice? Why not just once?

Double entry accounting is used to 'balance the books'. Every transaction must be written as a debit and credit in one of the 5 accounts; asset, liability, income, expense, or capital accounts. Just as a coin has two sides, every transaction has an equal and opposite effect in 2 different accounts. Each entry is used in accordance with the equation Assets = Liability + Expenses. However, using this method does not guarantee there will be no errors, for example, the wrong ledger account may be debited or credited, or the entries completely reversed.

3 x Assets, Liabilities and Expenses of Cash Converters.

Assets: Cash & Cash Equivalent, Trade Receivables and  Personal Loan Receivables
Liabilities: Trade and other payables, Borrowings and Tax Payable
Expenses: Administrative expenses (such as employee wages, superannuation, benefits), Occupancy Expenses (Rent) and Other (e.g Legal Fees and bank charges)