welcome to my dear children welcome back to the second session of unit six second session of unit six those who can remember what unit which one are we in let's remind ourselves the unit that we are doing need six dual impact that's right we are in dual impact of transactions dual impact of transactions and we have already done um how to [Music] how to record the dual impact of transactions under the accounting equation yeah and in the previous session you may remember well you can't forget these things right yeah in the previous session uh we discussed discussed how to record the dual impact as double entries yeah as double entries we recorded under the accounting equation and i told you that recording the dual impact of transactions each and every transaction under the accounting equation is not practical i told you that it's not practical yeah that's why as a accepted practice we use the accounts to record these impacts of dual impact of transactions and in the accounts only we record the double entries now right remember now we have a free space for us to grow the format of ledger accounts all right but going back to the last slide last screen of the previous session we read the the given passage the given explanation in your textbook this part is from your textbook and it said it says here an account is a commonly accepted structure commonly accepted structure it is used to record the change increase decrease of an asset equity and liability that is used to record this structure is used to record the change might be an increase might be a decrease of assets equity and liabilities furthermore in terms of expenses and this account these accounts are prepared by us and we record the double entries of transactions right in the coming few sessions and well up to the examination you will be preparing hundreds of these type of accounts these type of accounts you see it really observe look carefully how the account is uh structured how the account is drawn let me give you a simple hint i'll give you a simple clue children these accounts are known as ledger accounts these are known as ledger accounts okay the word ledger may not be familiar to some people and maybe some familiar to some others but let me explain these accounts are known as ledger accounts i'll just write the word here okay can you see that word it says ledger ledger ledger accounts these accounts are known as ledger account why because in practice in real life in real businesses children the transactions are recorded the double entries are recorded in these accounts right in these accounts like make no mistake of that make no mistake all the transactions should be recorded in base accounts right but why do we call these accounts by that name why because in real life in real businesses children all over the world this system is used the double entry system to record transactions and transactions are recorded in these accounts these accounts should be drawn these accounts should be drawn i mean this account should be drawn right in books well traditionally the the accounts were drawn in books not anymore now businesses they do not use books to grow these accounts okay our businesses nowadays they don't use these books to draw these accounts they use computers all right these accounts are now um stored in computers and double entries are recorded in a computerized system but you can't do that you students you are learning this system and learning how to record in accounts so you should do it in books in exam you can't just say um idea examiner sir i haven't actually paid attention to learn how to record in books because it's not practical nowadays nowadays all the accounts are prepared in computerized systems so i will not prepare these accounts or do these questions thank you well you can't say that you have to prepare these accounts you have to prepare we are you have to draw these accounts okay right that's what we're gonna and in the traditional according to the traditional method the accounts were drawn in large books all right there were large books like very large books they have a large books used to record used to draw these accounts these accounts all right most of the time one page of these books used for one account that's how the books were used right and the books were large books spiral binding in the middle all right i'm just showing you how a ledger book looks like all right spiral binding in the middle large books like this these books which used which were used to draw these accounts these books were named as ledger books the name of these books were ledger books right so now you can think of now you can guess why the accounts are known as ledger accounts that is why this is why the books were called ledger books and the accounts which were drawn in the books were obviously called ledger accounts because of the name of the books ledger books all right that's a little bit of history okay most of the businesses these days nowadays most of the businesses do not use leisure books these ledger books are not used by most of the time but we have to learn how to draw accounts ledger accounts and how to manually record transactions can't help you all right this is the learning time all right so this format is globally used and used and we too as students use the accepted format of ledger accounts and we record double entries right children a ledger account is easily drawn in the format or in the shape of a capital t letter a ledger account is easily drawn in the shape of a capital t letter see can you see the t this is the t children this is a capital t letter in english alphabet right see the t it's the shape of a capital t then you can divide your left hand side columns and right hand side columns all right one column for the date one column for description there's a another column for ledger for leo which will not be used much okay and finally value column all right so this is the left hand side right hand side also the same one column for the date one column for the description and a small column for ledger for you finally finally the column for value this is the format of a ledger account you must practice to draw this format i advise you when you draw ledger accounts i advise you to draw the t format first draw the t first it's easier then it'll be easier for you then up to you i'm giving you an easy method to grow ledger accounts you draw the t format first okay when you draw the d format first how how does it become easier well when you draw the t for my children it becomes easier because the two sides are equally divided by the t huh before you divide any columns before you draw these columns just draw the t first okay then you divide the left hand side into four columns right hand side into four columns okay the columns come in this manner narrow column white column again narrow color white color remember it like that narrow column for date children it doesn't matter it doesn't matter whether it's narrow or white but just to make you just make it easy to remember narrow column wide column again narrow column little wider white color all right four columns on the left hand side four columns on the right hand side four columns on this side four columns of this side easy right but it's not over we use names for these two sides we use names we call the left hand side debit side debit left hand side is known as the debit side and we call the right hand side credit side all right okay we call the left hand side debbie and the right hand side we call it credit okay practice with me practice it debit on the left credit on the right okay the two sides debit on the left credit on the right debit left cut it right a bit left credit right don't get confused between debit and credit if you put credit here and debit here end of story your all your accounts will be raw so say it with me debit on the left credit on the right debit on the left credit on the right debit left credit right a bit left credit right okay we'll draw one ledger account by ourselves right now tell me how to draw a ledger account tell me what should i do draw first what should i draw first what what what what what should i draw first the d that's right i should draw the t first the t all right here you go vertical line and horizontal line t this is t now what you do is you separate the columns on left side left debit side that's right david's side there we go on the left okay just separate the columns on the debit side narrow wide narrow white okay now to the credit side narrow wide narrow why all right okay and the header the heading row you draw the heading row you put headings on the top okay on top headings now you tell me the headings tell me the headings what is the first column what is the first column first column first column value no date first all right date second column details you can say description you can say details doesn't matter third column ledger folio as your folio fourth column value you can just put the rupee sign it doesn't matter okay just put the rupees i it's okay again on to the credit side now same columns date details ledger folio and rupees value column in the corner okay are you clear with the children all right okay another something that you should be aware of you should be aware of okay every asset has an individual account which means for every asset you should draw an individual account for every liability you should draw an individual account for every income you should draw an individual account for every expense although you should draw an individual account how many accounts are we gonna need many will practice with many many accounts right this is the format of a ledger account children the format of a hmm we'll name this account we'll name it cash cash account so if i ask you uh what type of an account is this what type of an account yeah yeah yeah i know yeah i know it's it's a cash account okay but what is the type of this account what is cash what is cash in the business what is cash cash is a liability no children cash is an asset so this cash account becomes automatically it becomes a it becomes an asset account this becomes an asset account it's an asset account okay likewise not only this you will have many many many more asset accounts like building account furniture account equipment account motor vehicles account machineries account data's accounts there will be a number of debtors all assets and all should have separate accounts don't be scared now don't be scared now you will not get like 100 oh a large number in your exam uh to draw but you will definitely get these ledger accounts and double entries will be tested your knowledge of double entries will be tested in your examination okay for that we have to practice we'll do it take it your heads children the format and the drawing of ledger accounts are up to you practicing is up to you i will show you i will teach you and i will give you more exercises more transactions more model questions we do you can do it with me but practice practicing the accounts at home is up to you more you do better you become all right types of ledger accounts now we already learned we already drew we ruled one account that's how you say you don't say drawing accounts you say you are you are ruling accounts you ruled ruling means drawing the format so we already ruled one account and that was a that is a cash account so i told you it's a it's an asset account likewise children there are more types of accounts the main types are asset accounts like the cash account then we have liability accounts liability accounts bank loan account creditors accounts electricity expense payable accounts we have liability accounts we have equity accounts capital drawings these are equity accounts then we have income accounts sales sales commission account interest income count and finally we have expense accounts yeah salary expense insurance expense electricity expense so on and so forth many expense accounts are there but basically children how many types of ledger accounts should you remember how many types one i said i got two liar ability accounts set again then liability accounts two equity accounts three equity with that we have three types then four income accounts fifth one yes expense accounts there you go how many types five times five types of accounts are there okay okie dokie let's draw some accounts and let's learn how to record transactions um shall we read this text we already discussed that assets equity liabilities income and expenses arise due to business transactions and accounts are used to record these changes in changes happening due to transactions all these accounts can be classified into five types there you go five types five types five times okay the the picture even shows can be divided into five as assets liabilities equity incomes and expenses all right so five types of accounts and it says when recording business transactions in accounts the value of a transaction should be either recorded in the debit side or credit side of the relevant account that's something interesting let's learn about it how to record transactions double entries in accounts what do we have here it says due to transactions the increasing and decreasing of values of assets equity liabilities income and expenses due to transactions i'm repeating increasing and decreasing of values of sets equity and liabilities income and expenses increasing and decreasing we learned how to yeah yeah we discuss right increasing and decreasing assets and liabilities and equity plus income incomes and expenses i entered in the ledger accounts previously we learned how to enter under the accounting equation now we learn how to enter a ledger account according to a double entry principle ah now what is that double entry principle double entry that's what this is what right at the beginning of this session children this is what i mentioned this is the basic fundamental principle of accounting double entry principle which is used by accountants bookkeepers to record transactions and i said if you become [Music] a professional related to accounting you know accounting professional in the field of uh accounting and finance you will be using this system the double entry principle the basic fundamental rule theory for the rest of your lives didn't i tell you right at the beginning not this session the previous session when you started this lesson you need six that is what is given here the double entry principle the fundamental rule for the principle of accounting and bookkeeping let's see children the types of accounts are given types of accounts are given in order one second accounts two liability accounts three equity for income and five expense accounts and what is here it says increase debit credit credit credit david decree's credit credit david david what does it mean my dear students i told you that every ledger account is drawn with two sides okay every last account is drawn with two sides debit in the left credit in the right debit left credit right left click how do you know on which side to record when a transaction is given to you whether to put that transaction amount in the debit side or whether to put that transaction amount on the credit side how do you know this is how you know in the different types of accounts different types of accounts different types of accounts children has a specific side to record and increase and a specific site to record a decrease increase decrease according to that rule only v you record these transactions and double entries of transactions in these accounts according to that rule of the principle which is the double entry principle okay the development principle says asset accounts if assets increase these asset accounts must be debited or asset accounts if it is an asset account if that asset increases that increasing value should be put to the debit side if the asset decreases that decreasing value should be put to the credit side so asset accounts if you are having an asset account at hand and you don't know how to record um let's take a transaction you don't know how to record owner investing cash to the business one has invested 100 000 100 cash comes into the business 100 cash comes into the business so cash is an asset and you have a cash account drone here you have a cash account drawn okay you don't know whether to put to the debit side or whether to put to the credit side this hundred oh we forgot one thing right children we haven't mentioned the debit side and the credit side critical mistake so you will learn from this mistake that you should never make this mistake again mention the debit side as dr credit on the right let's erase this remember never to make that mistake which mistake the mistake of not mentioning dividend credit all right so we'll do it now you should put dr on that debit side okay and cr on the credit side debit credit likewise now you don't know how to record that hundred the hundred uh uh 100 100 000 which the owner brought into the business cash which came into the business because of that investment or the owner's capital cash came into the business so that cash which which the business already had now that with that amount cash in the business has increased which side to put this hundred in the cash account well you refer to the double entry principle if it is an asset and if it is an increase should be put to the debit side yeah so this is the debit side you put the 100 here and how to fill the date and the details and the folio we'll learn just to show you how that debit credit rule is applied i took this transaction example transaction online investing hundred thousand into the business you can't just stop by putting the hundred in the asset account in the cash account you can't stop because you have to because you have to because you have to enter two entries children double entries what is the meaning of what is the name of the system double entry system you have to record double entries there you can't just put one debit entry and think that it's finished the transaction is recorded if one entry is on the debit side there must be another entry on the credit side okay that's how you record the double entries that is the meaning of double entry system one entry should be entered in the debit side of an account and the same amount entry should go to the credit side of another account double x okay for that what you consider is you consider how the transaction affected the accounting equation what were the increased component and what was the decreased component the dual impact that's what you consider so if we take this the transaction or the example we took right here the example we took which is the example we took is owner investing hundred thousand [Music] into the business if we take this transaction the same transaction you take the same transaction you recorded you already recorded one [Music] entry as considering the assets right considering the cash which came into the business because the cash increased you [Music] looked at the double entry principle and you saw assets increase should be debited and you put to the debit side of that cash account this one debit side of the cash account huh and now you are wondering um which account should be put to the credit side in which account should be put to the credit side to decide that i told you to consider the dual impact cash increased and assets and what is the other component which increased capital because the 100 was brought by the owner cash increased capital increased then the other component should be capital you should draw a separate account called capital and put and look at the double entry principle equity double entry principle for equity equity accounts increase should be credit so then you draw another account and name it as a capital or equity account narrow wide narrow wide narrow wide narrow wide easy right you name the account as capital account and put to the credit side this 100 to the credit side value column date details value again decide credit side date details value you put to the debit side and credit side same amount is recorded in two accounts one account debit other account credit this is how you record transactions and the dual impact of transactions in accounts right children don't you notice now the something that is missing all right i'll move to this side don't you notice something that is missing a mistake we have done we learn from the mistakes that's how we learn what is the mistake in this account in the account below the capital account yes good you notice that we didn't put we didn't name the debit side and credit side we didn't name the sides that was the mistake that is our mistake should put dr on the debit side and should put cr on the credit side dr cr debit on the left credit on the right maybe left right children likewise now we have learned the double entry principle the double entry principle which is here [Music] and we recorded one example transaction according to the double entry principle according to the double entry principle and we looked at we observed how the debit is recorded and the credit is recorded in two separate accounts same transaction same amount going to two accounts one accounting to the debit side the other account into the print side this is the double entry system an introduction to the double entry system and demonstrating how it is done remember the double entry principle the double entry some call it the rule the double entry rule and memorize the debits and credits that's up to you memorizing will make it easy to do your accounts better okay with that children we wrap up today's session recording transactions in double entry accounts in the next session i will be doing more exercises more transactions recording the double entry accounts so i hope to see you soon thank you very much