Double-Entry Accounting

Double-Entry Accounting is a fundamental accounting system that requires every financial transaction to be recorded in at least two accounts.

This method is based on the accounting equation: Assets = Liabilities + Equity. Each entry has a corresponding and opposite entry in a different account, ensuring that the accounting equation remains balanced.

For example, if a business purchases equipment for $1,000, it will record an increase of $1,000 in the Equipment account (an asset) and a decrease of $1,000 in the Cash account (another asset). This system enhances accuracy and allows for the detection of errors, as the total debits must always equal the total credits.