Double-Entry Bookkeeping

Double-Entry Bookkeeping (Definition)

Double-entry bookkeeping is a system of bookkeeping where every entry to an account requires a corresponding and opposite entry to a different account.

Key aspects of double-entry bookkeeping include:

1. Ensures that the accounting equation (Assets = Liabilities + Equity) always balances
2. Each transaction affects at least two accounts
3. Uses debits and credits to record transactions
4. Provides a complete record of financial transactions
5. Helps in detecting errors and maintaining accuracy in financial records
6. Forms the foundation of modern accounting systems
7. Essential for preparing accurate financial statements

Understanding and implementing double-entry bookkeeping is crucial for maintaining accurate and comprehensive financial records in businesses.