what is a double entry book keeping??

Answer 1

Businesses all over the world need to keep records of their finances in order to satisfy investors and legislators. The accepted way of keeping these records is by using the Double Entry System.

Whenever a normal transaction takes place, two things happen: something is gained and something is lost, and they are equal and opposite in value. For example, if a grocer buys apples, he gains the apples and loses money. When he later makes a sale, he gains money and gives away the apples. (Hopefully he gains more money than he paid out originally. Otherwise what's the point?) The opposing entries are expressed as Debit and Credit entries in the written records, and usually shown as left- and right-hand columns in a document. Money coming in is always a Debit (ie, on the left). If every entry has equal and opposite entries then logic dictates that the total of debits and credits must be equal. Regularly ensuring this is the case is called balancing the books.

The Accountant's Method of Debit and Credit

Accountants calculate their Debits and Credits in a different way to the rest of us because, in the UK at least, most people get their definition of debit and credit from their bank statement. Your statement actually shows the bank's account with you. The key thing to understand is that the bank's account with you is a mirror image of your account with the bank. The statement shows how much money the bank owes you (assuming you haven't got an overdraft, of course). When you write a cheque to someone, you are reducing the bank's debt to you. This is as good as money coming in, so it's a 'debit' entry.

Answer 2

In accountancy, the double-entry bookkeeping (or double-entry accounting) system is the basis of the standard system used by businesses and other organizations to record financial transactions. Its premise is that a business's (or other organization's) financial condition and results of operations are best represented by several variables, called accounts, each of which reflects a particular aspect of the business as a monetary value.

Every transaction is recorded by entries in at least two accounts. The total of the debit values must equal the total value of the credit values. The premise for this is that any monetary transaction must logically affect two aspects of a company. For example, if an item is purchased (Debit Inventory), then it must also be paid for (Credit Bank Account). Alternatively, if an item is sold (Credit Inventory), then the company must also be paid for it (Debit Bank Account). Most transactions consist of two entries, but can have three or more entries e.g. Supplier Invoice Total = Net value + taxes. This system is called double entry because all transactions must "balance" - the debit and credit sides must equal the same amount.

Historically, debit entries have been recorded on the left hand side and credit values on the right hand side of a general ledger account. The ledger accounts are set up as T accounts so called because they resemble the letter T when the account is empty.

Answer 3

In accountancy, the double-entry bookkeeping (or double-entry accounting) system is the basis of the standard system used by businesses and other organizations to record financial transactions. Its premise is that a business's (or other organization's) financial condition and results of operations are best represented by several variables, called accounts, each of which reflects a particular aspect of the business as a monetary value.

Every transaction is recorded by entries in at least two accounts. The total of the debit values must equal the total value of the credit values. The premise for this is that any monetary transaction must logically affect two aspects of a company. For example, if an item is purchased (Debit Inventory), then it must also be paid for (Credit Bank Account). Alternatively, if an item is sold (Credit Inventory), then the company must also be paid for it (Debit Bank Account). Most transactions consist of two entries, but can have three or more entries e.g. Supplier Invoice Total = Net value + taxes. This system is called double entry because all transactions must "balance" - the debit and credit sides must equal the same amount.

Historically, debit entries have been recorded on the left hand side and credit values on the right hand side of a general ledger account. The ledger accounts are set up as T accounts so called because they resemble the letter T when the account is empty
http://en.wikipedia.org/wiki/Double-entry_book-keeping

Answer 4

Double entry accounting refers to entering the information in two places. A general journal records the elements of the transaction while ledgers of the individual accounts record all the individual transactions of that particular account. It helps insure no errors are made.

Answer 5

If you are going into business, you'll need an accountant to set up your books and a bookkeeper to gather and record your financial data. Businesses record their transactions by the double-entry bookkeeping process.

Double-entry bookkeeping is based on an equation which states that a business's assets (cash, accounts receivable, inventory, real estate, and equipment) minus its liabilities (any amounts owed to suppliers and other creditors) equals proprietorship (the company's worth to its owners). Income increases proprietorship, expenses decrease it. Every business transaction affects more than one component of the equation but in such a way that the two sides always balance. A sale of goods for cash increases an asset (cash) and proprietorship (income). Payment of a loan in cash decreases an asset (cash) and a liability (loans payable). In both cases, the balance of the equation is unaffected.

Business transactions are recorded in five basic types of accounts: asset, liability, proprietorship, income, and expense. These accounts, which may be subdivided, are contained in a book called the general ledger. Debits and credits Each ledger page contains information on one account only. A page is divided into a left, or debit, side and a right, or credit, side. (In bookkeeping, the terms debit and credit refer only to the left and right sides of a ledger page.) Increases and decreases in an account are entered on opposite sides of a page. Increases in assets and expenses are entered on the debit side; increases in liability, proprietorship, and income on the credit side. Thus, payment of a loan in cash is credited to cash (an asset decrease) and debited to loans payable (a liability decrease). The difference between total credits and debits in one account at the end of a bookkeeping period is called the balance-a credit balance if credits are greater; a debit balance if debits are greater.

For every debit entry in one account there must be a corresponding and equal credit entry in another; hence
the term double-entry bookkeeping.

Total debits in all accounts in the ledger must always equal total credits. Similarly, the sum of debit balances in the ledger must always equal the sum of credit balances. If they don't, the records contain an error that must be found and corrected.

Answer 6

it is a prt of accountncy
in accounts evey entry or financial statment hs 2 effects. so it is a double entry system