accounting






 

Question by  catysuzgirl2000 (578)

Can you explain double entry bookkeeping system?

I am having a hard time understanding how this works.

 
+7

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.

 
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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.

 
+5

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.

 
+5

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.

 
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