Double-entry accounting

In this lesson

1. 0:00 Double entry accounting fundamentals
2. 0:18 The accounting equation explained
3. 2:03 Rearranging the equation for financial position
4. 3:24 Sole traders versus limited companies
5. 4:31 Hugo's transaction worked example
6. 7:31 Ledger accounts and T accounts
7. 9:15 Debits and credits definitions
8. 11:15 Five-step recording process
9. 11:55 Maria's transaction practice problems
10. 15:11 Debits and credits cheat sheet

About this lesson

You'll learn why every transaction requires equal debit and credit entries, how the accounting equation (Assets = Equity + Liabilities) underpins this system, and the practical rules for debits and credits across assets, liabilities, capital, income, and expenses. The lesson walks you through the concept of duality: the principle that each transaction affects at least two ledger accounts in equal and opposite ways, keeping the accounting equation balanced. You'll see how T-accounts work in practice, with debits recorded on the left and credits on the right, and you'll work through real examples—from Hugo's business transactions to Maria's monthly activity—to understand how to identify which accounts to use and whether amounts increase or decrease. By the end, you'll have a clear framework for recording transactions correctly: identify the nature of the transaction, pick the right ledger accounts, determine if items are increasing or decreasing, decide whether those changes are debits or credits, and record entries that balance. This is essential knowledge for FA, FR, and MA papers, and forms the foundation for all financial accounting work you'll encounter in your ACCA or CIMA studies.

Duration: 16m