What is Double-Entry Bookkeeping?
Definition
Double-entry bookkeeping is an accounting method where every financial transaction is recorded in at least two accounts — a debit in one and a credit in another — ensuring the books always balance.
Explained Simply
This system, developed in the 15th century, is the foundation of modern accounting. For every transaction, total debits must equal total credits. For example, when a business receives R10,000 cash for a sale, the Cash account is debited (increased) and the Revenue account is credited (increased). This creates a self-balancing system that makes errors easier to detect. The accounting equation (Assets = Liabilities + Equity) is always maintained.
Related Terms
General Ledger
A general ledger is the master accounting record that contains all financial transactions of a business, organised by account, forming the basis for financial statements.
Trial Balance
A trial balance is a report listing all accounts in the general ledger with their debit or credit balances, used to verify that total debits equal total credits.
Journal Entry
A journal entry is a record of a financial transaction in the accounting system, showing the accounts affected, the amounts debited and credited, and the date of the transaction.
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