Double-Entry Bookkeeping

The double entry is an accounting system based on the principle that financial transactions must be recorded in terms of debits and credits. In this way, each transaction is identified by two accounting entries in two different accounts. For instance, one debit recorded in one account is offset by a credit in another, corresponding account. Double-entry bookkeeping is an easy and safe method to prepare financial statements because the data are taken directly from the books of accounts. Moreover, it helps detect and rectify possible errors in the debit and credit balance, as normally all related entries recorded in the debit and credit accounts are identified by the same date and by a code. This makes it simpler to trace back transactions and avoid or ...