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Ideally every transaction a business enters in their books should involve a Debit in
one account and a Credit in another for the amount involved. If this does not happen
our accounts will be wrong at the end of the year. The errors fall into 3 categories:
1. One or both entries left out of the accounts.
2. One entry on the wrong side of an account.
3. The wrong amount entered in an account
For Example, look at a Sales Day Book. It records all sales on credit to our varied
customers (ignoring VAT):
You can see, with so many entries there is great potential for mistakes to be made. The
Leaving Cert questions tell you that the mistakes have been made and you have to fix
them. The strategy for fixing them is threefold:
1. First decide what ideally should have happened
2. Then show what actually did happen
3. And then change it so that the actual looks like the ideal.
The hardest part is deciding what should have happened, you do this by using the
BookKeeping Key
DEBIT CREDIT
How this works is: every account is either an Asset, Liability, Expense or Income.
First we chose what type of account you are dealing with. Eg Sales is an income,
Capital is a Liability, Machinery is an Asset. We then look at which column it appears
in. If it appears in a column in the key under the Debit heading, then a Debit entry will
increase the account and the opposite, a Credit, will reduce it.
Once you know what you should have done, then you can plus or minus the entries
actually made with what should have happened to fix the error.