Can you explain double entry bookkeeping system?

Answer by  AEF (519)

In double entry bookkeeping, every transaction takes place in two different accounts. By being entered twice independently, errors are much easier to locate.

Answer by  Stef24 (38)

Double-entry bookkeeping is a record of TWO accounts, using two columns-debits and credits. For each credit there is an equal and opposite credit. The sum of all debits must equal the sum of all credits. This is a much more detailed method and is used to ensure accuracy. You will have 2 transaction and 2 columns.

Answer by  bigkevin (111)

Before the concept of negative numbers people in Italy developed double entry bookkeeping to explain how a company received money, how the money was spent and what the effect of financial actions were on different items. These items are called accounts. Double entry is simply subtracting from 1 account and adding to another account to balance out total spending.

Answer by  Kurt (4579)

There is always an offset in double entry bookkeeping. If you increase your inventory ( debit asset ), you probably decrease your cash ( credit asset ) or increase your liability ( credit liability). You need a cheat sheet on what the debits and credits do for each category.