Double entry book-keeping is an accounting practice of recording every financial transaction as both a debit and credit.
Traditionally these debits and credits were entered into a journal or ledger by hand using ink (hence where the name bookkeeping actually comes from), but as with most modern business and commerce, they have been superseded by computers and professional accountancy software packages.
Example of double entry book-keeping
Taking the example of a greengrocer, whenever a transaction is carried out they will do two things. Firstly they will purchase products such as fruit and vegetables from a wholesaler as their shop stock, causing a loss of money.
Secondly, they will then display and sell these products in their shop or stall and hopefully make an equal, but more likely a profit on what they have bought.
These two opposing transactions, the loss and profit, are entered into a accounts ledger with the money coming in known as a credit and the money going out a debit.
This financial information is then displayed in the ledger in two columns, with the left-hand side portraying debits and the right-hand column used to record credits.
Further Information
If you would like to know more about double entry book-keeping, it is recommended that you consult a textbook dedicated to accountancy and book-keeping, which can be purchased at amazon.com
Alternatively you could seek the advice of a qualified accountant or bookkeeper, who will keep your accounts and ledgers in order. Efficient bookkeeping is a must to ensure adequate local taxes are being paid otherwise you could be investigated for irregular accounting.
