So to get started, Tom needs to buy a domain and web hosting. He buys a domain and one month of hosting from a company for £20. He buys this via their website, entering his business card details. The money is taken from his bank and he now owns a domain and has a month of hosting.
The money for this is taken directly from his business bank account, so we simply debit the expense code and credit the bank:
We can now work out that the balance to carry down on the bank will be £980, so if we looked at his bank statement now, the balance will be £980.
Lets also take a quick look at his trial balance as it currently stands:
Nothing very exciting, but you can see it still balances because we have entered a debit and credit for each transaction. His profit and loss account will show a loss of £20 because he is yet to make a sale (poor guy).
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