Double Entry System


 Double entry is the fundamental concept underlying present-day bookkeeping and accounting.Double-entry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the equation Assets = Liabilities + Equity, in which each entry is recorded to maintain the relationship.
BREAKING DOWN 'Double Entry'
In the double-entry system, transactions are recorded in terms of debits and credits. Since a debit in one account will be offset by acredit in another account, the sum of all debits must therefore be exactly equal to the sum of all credits. The double-entry system of bookkeeping oraccounting makes it easier to prepare accurate financial statements directly from the books of account and detect errors.
Types of Accounts

Bookkeeping and accounting are a way of recording business transactions in monetary terms. A business transaction is an exchange of financial interests between at least two economic entities that in bookkeeping and accounting are expressed as accounts. There are a total of seven different types of accounts that all business transactions can relate to: assets, liabilities, equities, revenue, expenses, gains and losses. In essence, bookkeeping and accounting track changes of the amount of money in each of the seven accounts as a company conducts its business activities.

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