OxfordAQA A-Level Accounting: The double entry model (9615) – Revision Notes

For full explanations and worked examples, use the double entry model study guide. These notes condense section 3.1.3 The double entry model of the OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards. All of 3.1.3 is International AS content; the specification includes it in the content for Paper 1 and Paper 2. Amounts are in dollars and all examples are invented.

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1. The rule

Debit: increase in an asset, expense or drawings. Credit: increase in a liability, income or capital. Every transaction has at least one debit and one credit of equal total.

2. Source document to book of prime entry

Source document	Book of prime entry
Sales invoice	Sales journal
Purchase invoice	Purchases journal
Credit note sent	Sales returns journal
Credit note received	Purchases returns journal
Journal voucher	General journal
Cheque counterfoil, till roll, cash receipt, paying-in slip counterfoil	Three column cash book
Bank statement items: standing order, direct debit, credit transfer, dishonoured cheque, debit card transaction, direct transfer	Three column cash book

Ledgers: receivables ledger (credit customers), payables ledger (credit suppliers), general ledger (all other accounts).

3. Core double entries

Transaction	Debit	Credit
Credit sale	Customer (receivables ledger)	Sales
Credit purchase	Purchases	Supplier (payables ledger)
Goods returned by customer	Sales returns	Customer
Goods returned to supplier	Supplier	Purchases returns
Customer pays, less cash discount	Bank; Discounts allowed	Customer
Pay supplier, less cash discount	Supplier	Bank; Discounts received
Customer’s cheque dishonoured	Customer	Bank
Direct debit for an expense	Expense	Bank
Credit transfer received from customer	Bank	Customer
Contra (set-off)	Supplier (payables ledger)	Customer (receivables ledger)
Write off irrecoverable debt	Irrecoverable debts	Customer
Recovery: reinstate, then receive	Customer, then Bank	Irrecoverable debts recovered, then Customer
Increase provision for doubtful debts	Income statement	Provision for doubtful debts
Decrease provision	Provision for doubtful debts	Income statement
Depreciation	Depreciation (expense)	Accumulated depreciation

Trade discount: no entry. Record the net invoice value only.

4. Disposal account in four steps

1. Debit Disposal, credit Non-current asset: cost.
2. Debit Accumulated depreciation, credit Disposal: depreciation to date.
3. Debit Bank (or the buyer), credit Disposal: proceeds.
4. Balance the account. A balancing figure on the credit side is a loss (expense). On the debit side it is a profit (income).

Quick check: proceeds − carrying amount = profit (positive) or loss (negative).

5. Formulas

Item	Formula
Straight line depreciation	(cost − residual value) ÷ useful life
Reducing balance depreciation	rate × carrying amount at start of year
Carrying amount	cost − accumulated depreciation
Cost of sales	opening inventory + purchases − purchases returns − closing inventory
Revenue (net)	sales − sales returns
Provision charge	new provision − old provision (increase = expense; decrease = income)
Expense charged	amount paid + amount owing − amount prepaid
Income credited	amount received + income due − income received in advance

Calculate the provision on receivables after writing off irrecoverable debts.

6. Adjustments: where each one goes

Adjustment	Income statement	Statement of financial position
Other payables (expense owing)	Increase expense	Current liability
Other receivables (expense prepaid)	Reduce expense	Current asset
Income due	Increase income	Current asset
Income received in advance	Reduce income	Current liability
Irrecoverable debt written off	Expense	Reduces trade receivables
Irrecoverable debt recovered	Income	Bank increases
Provision for doubtful debts	Change only	Deducted from trade receivables
Depreciation	Charge for the year	Deducted from cost
Loss / profit on disposal	Expense / income	Asset and its depreciation removed
Closing inventory	Reduces cost of sales	Current asset

7. Method: statements from a trial balance

1. Mark each trial balance line as income statement or statement of financial position.
2. Tick off each additional item twice: once in the income statement, once in the statement of financial position.
3. Revenue less sales returns.
4. Cost of sales using opening and closing inventory and purchases less purchases returns. Service businesses skip this step.
5. Gross profit, then add other income (discounts received, rent received, profit on disposal, decrease in provision, irrecoverable debts recovered).
6. Deduct adjusted expenses to get profit for the year.
7. Statement of financial position under the five subheadings: non-current assets, current assets, current liabilities, non-current liabilities, equity.
8. Equity = opening capital + profit − drawings. It must equal net assets.

8. Capital or revenue?

	Expenditure	Income
Capital	Buys or improves a non-current asset (including delivery and installation)	Capital introduced, loans received, sale proceeds of non-current assets
Revenue	Running costs and maintenance	Sales, fees, rent received, commission received

Test: does the spending give a benefit over more than one period by adding to an asset? If yes, it is capital expenditure.

9. Must-know distinctions

• Trade vs cash discount. Trade discount reduces list price and is never recorded. Cash discount rewards prompt payment and is recorded through the cash book discount columns.
• Irrecoverable debt vs provision for doubtful debts. An irrecoverable debt is a specific debt that will not be paid and is removed. A provision is an estimate against debts that might not be paid; the debts stay in receivables.
• Other payable vs income received in advance. Both are current liabilities. One is an expense not yet paid; the other is income received before it is earned.
• Straight line vs reducing balance. Straight line gives an equal charge each year. Reducing balance gives larger charges in early years, which suits assets such as vehicles that lose more value early on.
• Contra in the cash book vs contra between ledgers. Moving cash into the bank is a cash book contra. A set-off between a customer’s and supplier’s accounts for the same business goes through the general journal.

10. Service business layout

A service business has no cost of sales or gross profit. Pell Street Tutors received fees of 58,400, of which 900 is for next year’s lessons.

Income statement for the year ended 30 June 2026
Fees (58,400 - 900)                              57,500
Expenses: rent 9,600; wages 21,300;
insurance 720; depreciation 1,450               (33,070)
Profit for the year                              24,430

The 900 is a current liability. The statement of financial position uses the same five subheadings as for a trading business.

Quick self-test

1. Goods with a list price of 5,000 are sold on credit with 20% trade discount and 3% cash discount for payment within 7 days. The customer pays in time. What is the invoice value, the discount allowed and the amount received?
2. A machine costs 45,000, has a residual value of 5,000 and a useful life of eight years. Calculate the straight line charge.
3. Equipment costs 20,000 and is depreciated at 30% reducing balance. Calculate the year 2 charge and the carrying amount at the end of year 2.
4. Trade receivables are 24,000. The provision is to be 4%; last year’s provision was 1,100. What goes to the income statement?
5. A van cost 12,000, accumulated depreciation is 7,500 and it is sold for 5,100. Profit or loss on disposal?
6. Opening inventory 6,200; purchases 51,000; purchases returns 800; closing inventory 7,400. Cost of sales?
7. Insurance paid in the year is 2,600, of which 400 covers next year. State the income statement charge and the statement of financial position entry.
8. Which book of prime entry records a credit note received from a supplier?
9. In a contra entry, which ledger account is debited?
10. Is repainting the shop capital or revenue expenditure?
11. State the two double entries when a written-off debt is recovered.
12. Under which subheading does income received in advance appear?

Answers

1. Invoice 5,000 × 80% = 4,000; discount allowed 4,000 × 3% = 120; received 3,880.
2. (45,000 − 5,000) ÷ 8 = 5,000 a year.
3. Year 1 charge 6,000, carrying amount 14,000. Year 2 charge 30% × 14,000 = 4,200; carrying amount 9,800.
4. New provision 4% × 24,000 = 960. Decrease of 1,100 − 960 = 140, shown as income (added to gross profit).
5. Carrying amount 12,000 − 7,500 = 4,500; proceeds 5,100, so profit of 600.
6. 6,200 + 51,000 − 800 − 7,400 = 49,000.
7. Expense 2,200; other receivable of 400 under current assets.
8. Purchases returns journal.
9. The supplier’s account in the payables ledger (the customer’s account in the receivables ledger is credited).
10. Revenue expenditure: it maintains the asset rather than improving it.
11. Debit customer, credit Irrecoverable debts recovered; then debit Bank, credit customer.
12. Current liabilities.

Where marks are usually lost

• Entering trade discount in the ledger, or calculating cash discount on the list price instead of the invoice value.
• Posting the discount column totals to the wrong side, or forgetting them entirely.
• Charging the full provision for doubtful debts instead of the increase or decrease.
• Calculating the provision before writing off the irrecoverable debt.
• Applying the reducing balance rate to cost every year.
• Recording a recovered debt only as cash received, without reinstating the customer’s account.
• Writing “accruals” or “prepayments” in the statement of financial position without the subheading the specification uses (current liabilities or current assets).
• Omitting or misnaming subheadings in the statement of financial position.
• Adding drawings to expenses rather than deducting them from equity.
• Leaving a disposal account without the cost or the accumulated depreciation transfer.

Official syllabus

OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards, published by OxfordAQA. Section 3.1.3 The double entry model.