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Double-entry bookkeeping

What is double-entry bookkeeping?

Under the double-entry bookkeeping system, all transactions within a business are recorded twice, i.e. always in both the debit and credit columns. Therefore, not only receipts and payments but also outstanding receivables and payables are taken into account. This distinguishes double-entry bookkeeping from cash-based accounting or cameralistic accounting. Business transactions are recorded in what are known as accounts. These are divided into balance sheet accounts and income statement accounts. Balance sheet accounts are shown on the balance sheet, whilst income statement accounts are shown on the profit and loss account (P&L). 

 

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