double-entry bookkeeping

Definition

An accounting technique which records each transaction as both a credit and a debit. Credit entries represent the sources of financing, and the debit entries represent the uses of that financing. Since each credit has one or more corresponding debits (and vice versa), the system of double entry bookkeeping always leads to a set of balanced ledger credit and debit accounts. Selected entries from these ledger balances are then used to prepare the income statement.

Use this term in a sentence

Double-entry bookkeeping is founded on the basic accounting equation of assets + liabilities = equity that is applied to transactions.

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bookkeeping single-entry bookkeeping