Aid for an ACCA F3 Student I

The difference between having an easy life studying ACCA F3 and the tough struggle againt it mainly depends on your understanding about one of the most basic accounting concept named double entry accounting. Although, at times, this might seem quite trivial to some people, I firmly believe that the understanding of this is the most basic and the most important step to take for every student accountant before embarking the journey of financial accounting. Let's dig in a litter deeper into what I am talking about.

Double Entry Concept

Each transaction that a business enters into affects the financial statements in two ways; e.g, a business buys a building for cash. This transaction have two effects on the financial statements.

1. There is an increase in buildings.
2.There is a decrease in cash.

To follow the rules of double entry bookkeeping, each time a transaction is recorded, both effects must be taken into account. These two effects are equal and opposite such that the accounting equation ' Assets - Liability = Capital' will always prove correct. Traditionally one effect is referred to as the debit side and the other as the credit side of the entry.

A quick reference to wiki about this is here.

Please let me repeat again here. This is one of the most important keys to unlock ACCA F3.