A Report On Double Entry Accounting - 1249 Words

Double entry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts, for example, is somebody transacts a purchase of a drink from a store, it have been paid by cash and in return, the shopkeeper give the bottle of drink to the customer. This simple transaction has two effects, the buyer’s cash would decrease by the amount of money of the bottle and the sellers will be short of a drink but his cash balance would increase the price of the drink. Without applying double entry accounting records would only affect a partial view of the company’s afraid. The two effects of an accounting entry are known as Debit (Dr) and Credit (Cr). It is used to satisfy the equation Assets = Liabilities + Equity, whereby each entry is recorded so as to maintain the relationship. Any increase in expense (Dr) will be offset by a decrease in assets (Cr) or increase in liability or equity (Cr) and vice-versa. Debit col umns on the left, credit on the right. Debits are on the left and increase a debit account and reduce a credit account. Credits are on the right and increase a credit account and decrease a debit account. Debit receives the benefit, credit gives the benefit, when any account gets money, and it will be debit when any account give money. After all your bank statement is credited when money is paid into your bank account. But look at it from the bank’s point of view, and it is the bank that issues the statement.Show MoreRelatedAccounting 504626 Words   |  3 Pagesterm double-entry accounting?   Examples are great and   try to build on what each other has said.   Double entry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. In the double entry system, transactions are recorded in terms of debits and credits. Since a debit in one account will be offset by a credit in another account, the sum of all debits must therefore be exactly equal to the sum of all credits. The double-entryRead MoreAccounting Software For A Business Essay1257 Words   |  6 PagesIndividual Assignment Name: Altaf Gohar Roll no: EAB2389 Accounting Software/Packages used in Australia Accounting  is referred as an art of collecting, classifying, and manipulating financial data for organizations and individuals.  It  is also used to determine financial stability or financial health of organizations. Accounting is the language of business and figures and is widely used as a means of communication for financial world, without it businesses cannot survive. 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