Double-entry bookkeeping

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Double-entry bookkeeping

Accounting method that records each transaction as both a credit and a debit in different accounts.

Double-Entry Bookkeeping

A system of accounting where every transaction is recorded as a debit to one account and a credit to another. That is, one who uses a double-entry bookkeeping system records each transaction twice, such that each credit (representing revenue) is recorded as a credit to one's capital account and as a debit on one's bank account. For example, if a company sells a product for $100, it adds $100 to its capital account and subtracts $100 to its bank account. One way of conceptualizing the bank account is from the bank's perspective: the debits are debits because any asset in a bank account represents a liability for the bank; this is why they are subtracted instead of added. However, the data are recorded twice to prevent errors in bookkeeping: the total debits and credits recorded should add to zero.
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Once the business community recognized the beauty of the double-entry bookkeeping system, rapid growth followed.
For example, the double-entry bookkeeping system is often taught by starting with the fundamental equation assets = equities, because the two are considered to be different classifications of the same set of resources, one based on the types of assets and the other based on claims upon them.
I understand that the primary goal of an introductory course is for students to learn the "nuts and bolts" of the double-entry bookkeeping system and to incorporate these entries to prepare basic financial statements.