The National Directory of Certified Public Accountants

Ask A CPA - Bookkeeping & Write-up

What Is The Double Entry Bookkeeping Accounting System ?

Every business transaction affects a minimum of two accounts. The sum of the debit and credit for each transaction is inherent in the basic accounting balance sheet equation, Assets = Liabilities plus Capital. It is because of this duality that the bookkeeping system is known as the double-entry bookkeeping system. The rules of debit and credit posting to the balance sheet accounts are that debits signify increases in asset accounts, and decreases in liability and capital accounts. The credits signify decreases in asset accounts, and increases in liability and capital accounts.

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