What is double-entry bookkeeping?
Aryan ShuklaBeginner
Asked: 4 weeks ago2024-10-23T16:52:02+05:30
2024-10-23T16:52:02+05:30In: Accountancy, Business & Finance
Double-entry bookkeeping
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Double-entry bookkeeping is an accounting system that ensures every financial transaction affects at least two accounts, maintaining the accounting equation: Assets = Liabilities + Equity. In this system, each transaction is recorded in two parts: a debit and a credit. The total debits must always eRead more
Double-entry bookkeeping is an accounting system that ensures every financial transaction affects at least two accounts, maintaining the accounting equation:
Assets = Liabilities + Equity.
In this system, each transaction is recorded in two parts: a debit and a credit. The total debits must always equal the total credits, providing a method to check for accuracy.
Key Concepts:
Example:
Suppose a business buys a computer for βΉ1,000 in cash:
This system provides a detailed, accurate financial picture, minimizes errors, and ensures that the financial statements (balance sheet, income statement) are always balanced.
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