Definition of Double-entry bookkeeping:
System of keeping accounting records that recognizes the dual nature (source and disposition) of every financial transaction expressed by the basic accounting equation (Assets = Liabilities + Owners Equity). In this system, every transaction is entered twice in the account books first, to record a change in the assets side (called a debit) and, second, to mirror that change in the equities side (called a credit). If all entries are recorded accurately, the account books will balance because the total of debit entries will equal the total of credit entries. Double entry bookkeeping is used universally, except in very small or cash-transactions based firms which use single entry bookkeeping. Invented in the 13th century by Venice merchants, it was formalized by the Italian monk Luca Pacioli (1445-1517) in the 1494 book Summa de Arithmetica, Geometrica, Poroportioni et Proportionaltie..
How to use Double-entry bookkeeping in a sentence?
- Many businesses prefer to use the double-entry bookkeeping method to record their financial transactions so that changes to assets, liabilities and owners equity are easily identified.
- The double-entry bookkeeping system provided an optimal environment for our accounting system to ensure checks and balances were placed to prevent errors.
- We had this system called double-entry bookkeeping that worked really great for us and would continue to be a system we used.
Meaning of Double-entry bookkeeping & Double-entry bookkeeping Definition