Double entry system
The double entry system is the nearly universal practice in bookkeeping and accounting, by which each transaction causes at least two changes in the accounts. A credit entry in one account causes a corresponding debit entry in another account, thereby maintaining the accounting equation:
Assets = Liabilities + Owners’ Equity
and
Debits = Credits
For example, an increase in a company’s assets on the balance sheet) might be accompanied by either
a corresponding increase in either owner’s equities or liabilities, on the other side of the balance sheet (opposite the Assets side), maintaing the balance sheet "balance."
or
a corresponding decrease in cash on hand on the same side of the balance sheet (with Assets), thereby maintaining the balance sheet "balance."
[ Encyclopedia ] [ Business Case Books & Tools ] [ Home ]
© Copyright Solution Matrix Ltd. 2004 - 2010
