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Accounting

How double-entry accounting works in a SACCO

Double-entry accounting is what makes a SACCO’s books trustworthy: every shilling is recorded twice — where it came from and where it went — so the books always balance.

By the SaccoMonitor team · Updated · 9 min read

Debits and credits in one table

Account typeIncreases withSACCO examples
AssetDebitCash, bank, mobile money float, loans receivable
LiabilityCreditMembers’ savings, fixed deposits
EquityCreditShare capital, retained earnings, reserves
IncomeCreditLoan interest, fees, penalties
ExpenseDebitSalaries, rent, interest on savings, loan write-offs

The journals behind everyday SACCO transactions

TransactionDebitCredit
Member deposits 100,000 cashCash 100,000Members’ savings 100,000
Member withdraws 50,000 (fee 1,000)Members’ savings 51,000Cash 50,000; Savings fee income 1,000
Member buys shares 20,000Cash 20,000Share capital 20,000
Loan of 1,000,000 disbursed, fee 10,000Loans receivable 1,000,000Cash 990,000; Loan fee income 10,000
Repayment 186,667 (interest 20,000)Cash 186,667Interest income 20,000; Loans receivable 166,667
Monthly salaries 2,000,000Salaries expense 2,000,000Bank 2,000,000

Why it matters

Because each entry balances, the whole ledger balances — which is what the trial balance checks. Member sub-ledgers also tie in: the total of all members’ savings accounts equals the members’ savings account in the ledger, and the total principal owed on all loans equals loans receivable.

In SaccoMonitor these journals are created automatically when staff record transactions, so the accountant only posts the non-member entries such as salaries and rent.

Frequently asked questions

A system in which every transaction is recorded as at least one debit and one credit of equal total, so total debits always equal total credits.

A liability: the SACCO owes that money back to its members. The cash received is the asset.

Because the member owes the SACCO the money; the outstanding principal is recorded as loans receivable.

Related pages

SACCO accounting software

Automatic double-entry in SaccoMonitor.

The SACCO trial balance

How to read and check it.

SACCO financial reports

From ledger to statements.

See it working in SaccoMonitor

Register your SACCO and try it with your own products and members.

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