LES QUATRES METHODES D'ENREGISTREMENT COMPTABLE

THE 4 STEPS METHOD OF BOOKKEEPING

step 1

everytime there is an event in the company, identify the accounts to use

(there is a minimum of 2 accounts to use for every event)

step 2

you have to know if the account is an asset, a liability, an equity, an expense or a revenue

step 3

you have to know if the account is increasing or decreasing because of the event

step 4

you summarize your answers to steps 1 to 3 and you use the following table :

asset

liabilities & equity

[pic 1]

[pic 2]

[pic 3]

[pic 4]

expenses

revenue

[pic 5]

[pic 6]

[pic 7]

[pic 8]

asset accounts increase on their left side, and decrease on their right side; same for expenses accounts

liabilities accounts increase on their right side, and decrease on their left side; same for revenue accounts

accounts placed on the left of financial reports increase on their left,

accounts placed on the right of financial reports increase on their right.

example n° 1

we purchase goods for a value of

10,000

we will pay next month. Today is the

18-Jan

accounts to use :

purchases

APs

accounts family :

expenses

liabilities

increase or decrease :

increase

increase

use the :

left

right

18-Jan

purchases

10,000

APs

10,000

example n° 2

we purchase goods for a value of

8,000

we pay with a cheque now. Today is the

19-Jan

accounts to use :

purchases

cash at bank

accounts family :

expenses

assets

increase or decrease :

increase

decrease

use the :

left

right

19-Jan

purchases

8,000

cash at bank

8,000

example n° 3

we send a cheque to the supplier from example n°1

we owed :

10,000

today is

20-Jan

accounts to use :

cash at bank

APs

accounts family :

assets

liabilities

increase or decrease :

decrease

decrease

use the :

right

left

20-Jan

APs

10,000

cash at bank

10,000

example n° 4

we sell goods for a value of

21,000

we will be paid next month. Today is the

25-Jan

accounts to use :

sales

ARs

accounts family :

revenue

assets

increase or decrease :

increase

increase

use the :

right

left

25-Jan

ARs

21,000

sales

21,000

example n° 5

we sell goods for a value of

30,000

we receive a bank transfer now. Today is the

27-Jan

accounts to use :

sales

cash at bank

accounts family :

revenue

assets

increase or decrease :

increase

increase

use the :

right

left

27-Jan

cash at bank

30,000

sales

30,000

example n° 6

we receive cash from the customer from example 4

he owed us :

21,000

today is

25-Feb

accounts to use :

cash in hand

ARs

accounts family :

assets

assets

increase or decrease :

increase

decrease

use the :

left

right

25-Feb

cash in hand

21,000

ARs

21,000