The double entry principle in accounting means that every business transaction will involve two accounts (or more). For example, when a company borrows money from its bank, the company’s Bank account will increase and its liability account Loans Payable will increase.

The girls have been using this principle since Grade 10 but have never really seen how it relates to the Bank Statement. Today with “Repeat Clothing Ltd” they were able to see the impact of the net profit from the income statement into the balance sheet. They learnt that in order for the balance sheet to “balance”, the net profit must be correct. An incorrect net profit will lead to an unbalanced Balance Sheet.

Here are some photos of the practical session:

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