Every source document leads to at least one debit and one credit of equal amounts. The skill is deciding which account gains and which one is reduced, then putting each on the correct side.
This lesson is part of source documents in SPM Accounting. If the amounts themselves are unclear, read invoices, credit notes and receipts first.
How do you go from a document to an entry?
Use three short questions for every document. What does the document prove? Which two accounts change? Does each one increase or decrease?
Then place the entry: an increase in an asset or expense is a debit, and an increase in a liability, capital or income is a credit. A decrease uses the opposite side.
Worked example: four documents from Ong Stationery
Ong Stationery buys paper from Delima Paper on credit. All amounts are in RM.
| Document | Account debited | Account credited | Amount | Delima balance owed |
|---|---|---|---|---|
| Invoice from Delima for paper | Purchases | Creditors (Delima) | 1 800 | 1 800 |
| Credit note, 100 damaged reams returned | Creditors (Delima) | Purchases returns | 200 | 1 600 |
| Receipt from a debtor, cash received | Cash | Debtors | 500 | (not Delima) |
| Cheque paid to Delima | Creditors (Delima) | Bank | 1 600 | 0 |
The third row has nothing to do with Delima. It is a different document with its own entry, even though it sits in the same batch.
The creditor account ends at RM0, which matches the paperwork: 1 800 − 200 − 1 600 = 0.
The mistake that costs marks
A common error is to read “credit note” and credit something. Suppose the credit note row is recorded as Debit Purchases returns 200, Credit Creditors (Delima) 200.
- Both sides still have the same amount, so the entry looks fine.
- The creditor account now shows 1 800 + 200 − 1 600 = 400 owed.
- The correct balance is 0, so the account is wrong by double the credit note, 2 × 200 = 400.
The fix is to ask what happened to the debt. The credit note makes the debt smaller, so the creditor account is debited.
Check yourself
Zura Enterprise sells goods to a customer on credit for RM960. Later it issues a credit note for RM120 for goods returned, and then receives RM840 by bank. Write the three entries and find the debtor balance.
Answer
- Sales invoice: Debit Debtors 960, Credit Sales 960.
- Credit note: Debit Sales returns 120, Credit Debtors 120.
- Receipt: Debit Bank 840, Credit Debtors 840.
Debtor balance: 960 − 120 − 840 = RM0.
What to study next
Practise with the source documents practice set, then read about avoiding document-date and amount errors. The debit-credit transaction trainer and a mistake log help you find which side you reverse most often.
If you want a teacher to explain why each side is chosen, see online one-to-one Accounting tuition.