Learn double entry bookkeeping by doing it

An account is the record of one thing: the bank, a van, sales, rent. Every account has two sides. Debit is the left side. Credit is the right side.

Double entry means every transaction is posted twice: once on the debit side of one account, and once on the credit side of another. The two amounts always match, so total debits always equal total credits.

There are two entries because every transaction has two effects. When a business pays rent, it has less money in the bank, and it has a cost for the month. One entry records each effect.

Which side makes an account go up depends on what kind of account it is. To make an account go down, post to the opposite side.

Assets and expenses

go up on the debit side

Liabilities, capital and income

go up on the credit side

Tideway Plumbing starts trading. In its first week the owner pays in £2,000.00, the business pays £400.00 rent from the bank, does a job for £650.00 on credit, and buys pipe and fittings for its jobs for £320.00 on credit.

Each line has one debit and one credit of the same amount, so the debits come to £3,370.00 and so do the credits. Bank was debited with £2,000.00 and credited with £400.00, so it holds £1,600.00.

Double entry is a skill, not a fact. You have it when you can do each of these without looking anything up.

• Say what kind an account is: asset, liability, capital, income or expense.
• Say which side each kind goes up on.
• Post an everyday transaction: money in, money out, a sale on credit, a purchase on credit.
• Balance an account, carry the balance down and bring it down to start the next period.
• List the balances in a trial balance, in the right columns, and add up both.
• Say what an agreed trial balance proves, and what it does not.

Behind all of it sits the accounting equation: assets equal liabilities plus capital. It is always true, because everything a business has was paid for by someone: a lender, a supplier or the owner.

Each step leans on the one before it, so the order matters. These are the modules to take, first to last.

1. Double entry from zero. What a business has and owes, debit and credit, buying and selling on credit, balancing an account and the trial balance.
2. Books of prime entry. The day books and the cash book, where a transaction is first written before it is posted to the accounts.
3. The journal. The entry for anything that has no day book of its own, such as the opening entries of a new business.
4. Errors the trial balance hides. The mistakes that still leave the two columns agreeing, and the journal that corrects each one.
5. Errors and the suspense account. What to do when the trial balance does not agree.
6. Control accounts. One account in the general ledger that checks a whole ledger of customer or supplier accounts.

Do not move on from the first module until posting an entry feels dull. Everything after it is the same rule used on a new kind of transaction.

• Thinking debit means bad and credit means good. They are only sides: left and right. Which way a side moves an account depends on the kind of account.
• Reading a bank statement as if it were their own books. The statement is written from the bank's side, so money in the account shows there as a credit. In the business's own books the same money is a debit balance on Bank.
• Posting one side only, or posting both entries to the same side. Either stops the trial balance agreeing.
• Recording a credit sale when the money arrives. The sale is recorded when it is made. The money arriving is a second transaction, from Trade receivables to Bank.
• Trusting an agreed trial balance too far. It proves that the debits equal the credits. A posting to the wrong account still balances.
• Learning the rule by heart and stopping there. Knowing the rule and using it at speed are different things, and only the second is tested by a real invoice.

Ledger Drill teaches double entry through questions, with no videos. A task is a few lines of reading, then questions you answer in the books.

• Tap debit or credit on a pair of T-accounts to post a transaction.
• Build a journal entry line by line, with the account, the side and the amount.
• Type the balance of an account.
• Sort accounts into assets, liabilities and capital.
• Find the one wrong line in a trial balance.

Every answer is marked at once, with the rule behind it. A posting is right when the debits equal the credits and each account is on the correct side.

The modules and rooms are listed below, in order. A room that costs nothing carries a Free tag, and you can start it with no account.