Aid for an ACCA F3 Student II

If you are a student accoutant currently studying ACCA F3 Financial Accouting, I hope this post has got something helpful for you. If you are an experienced accountant, well i guess the topic in this post will be something trivial to you.

When I first started learning about double-entry bookkeeping, I had a little trouble trying to decide whether accounting item should be in debit or credit. For example , if the business purchases a motor vehicle by cash , I know that the two accouting items are motor vehicle and cash, but I couldn't easily decide which is debit or which is credit.

So I tried to get a way to easily identify this and I got myself this easy way as follows.

************
****AID****
****EID****
************

That means if Asset Increases, it is Debit. Likewise, if Expense Increases, it is Debit.
Since we only have Assets, Liability, Capital, Income and Expenses, if the rest of them increases, it is a liability. Let's re-use the example above. If the business purchases a motor vehicle by cash, the two accounting items are motor vehicle and cash. In this case, we know that both a motor vehicle and cash are assets. We also know that motor vehicle increases, so it is debit(AID), but as for cash, it decreases and it is credit.

So we get ourselves as follows:
Dr Motor Vehicle 3000
Cr Cash 3000

Hope this helps you.