Meaning of Double Entry - SS1 Accounting Lesson Note

Double entry is a method of bookkeeping that involves recording every financial transaction in at least two different accounts. Each transaction has two aspects: a debit and a credit. Debits represent money going out, while credits represent money coming in.

For example, if a business purchases inventory on credit, the double entry would involve debiting the inventory account to increase its value, and crediting the accounts payable account to record the amount owed to the supplier. By recording both aspects of the transaction, the business can track its inventory and outstanding debts accurately.

In double entry bookkeeping, every transaction must be recorded twice - once as a debit and once as a credit. This ensures that the accounting records are balanced, and that the total debits always equal the total credits. This also helps to identify errors in the accounting records, as any discrepancy between the total debits and credits would indicate an error that needs to be corrected.