I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART C: THE USE OF DOUBLE-ENTRY AND ACCOUNTING SYSTEMS 

 

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(l) 

Advertising expenses (expense item) 

(m) 

Bank charges (expense item) 

(n) 

Motor expenses (expense item) 

(o) 

Telephone expenses (expense item) 

(p) 

Sales (revenue item) 

(q) 

Total cash or bank overdraft (current asset or liability) 

When it comes to drawing up the financial statements, the revenue and expense accounts will help to 

form the statement of profit or loss, while the asset and liability accounts go into the statement of 

financial position. 

2.1 The format of a ledger account 

If a ledger account were to be kept as a manual system in an actual book, rather than as a file in a 

computerised system, it might look like this: 

ADVERTISING EXPENSES 

Date Narrative 

Ref.   Date Narrative 

Ref.   

 

 

 

$       

 

 

$ 

15 April 

20X6 

JFK Agency for quarter 

to 31 March 

PL 

348 

2,500   

  

For the rest of this chapter, we will assume that a manual system is being used, in order to illustrate 

fully the working of the ledger accounts. Remember that a computerised system performs the same 

functions, although the actual ledger accounts will be stored as computer files and so may be hidden 

away within the system. 

There are two sides to a ledger account, and an account heading on top, and so they are often referred 

to as T-accounts. 

(a) 

On top of the account is its name. 

(b) 

There is a left-hand side, or debit side. 

(c) 

There is a right-hand side, or credit side. 

NAME OF ACCOUNT 

 Debit 

side   

$  

Credit 

side 

 

$ 

 

 

 

 

 

 

 

 

We will look at 'debits' and 'credits' in detail in Section 4, but first we shall consider the accounting 

equation.