An accounting system where every transaction is recorded in at least two accounts — a debit in one and a credit in another — ensuring the accounting equation always balances.
Double-entry bookkeeping is the foundation of modern accounting, dating back to 15th-century Italy. For every transaction, the total debits must equal total credits. This system provides built-in error checking and creates a complete audit trail. Assets and expenses increase with debits; liabilities, equity, and revenue increase with credits.
When a business receives ₹50,000 cash from a customer: Debit Cash ₹50,000 (asset increases) and Credit Sales Revenue ₹50,000 (revenue increases). Both sides balance.
glossaryTermPage.reasons.accuracy
glossaryTermPage.reasons.compliance
glossaryTermPage.reasons.decisions
glossaryTermPage.reasons.efficiency
Double-entry provides error detection (debits must equal credits), complete financial statements, audit trails, and accurate tracking of assets and liabilities. Single-entry only tracks income and expenses.
Most businesses beyond sole proprietorships should use double-entry. It's mandatory for companies under the Companies Act and GST-registered businesses in India. Modern accounting software like Laabam.One handles double-entry automatically.
A record of a financial transaction in the accounting system, showing the accounts affected, amounts debited and credited, date, and description.
The master accounting record that contains all financial transactions of a business, organized by account.
A report listing the closing balances of all general ledger accounts at a specific date, used to verify that total debits equal total credits.
A complete listing of every account in a company's general ledger, organized by category (assets, liabilities, equity, revenue, expenses).
glossaryTermPage.cta.subtitle