Concept And Meaning Of Double-entry Book-keeping

Book-keeping is an act of keeping permanent records of the financial transactions of a business in a systematic and orderly manner. The financial transactions of the business are identified, recorded and classified in different books. In modern entities, records of financial transactions are maintained under a double-entry system. The double entry system has been recognized as a systematic and complete system for recording financial transactions. Double-entry system recognizes that every financial transactions has two aspects. It then records two aspects of a transaction simultaneously in two separate accounts with equal amounts. It provides the aspects of a transaction with their names of debit and credit. Thereafter, with the help of ledger accounts, profit and loss account and the balance sheet are prepared to ascertain the profit and loss and the financial position of the business. Thus, the double-entry system is the most systematic and complete system of book-keeping. Therefore double-entry system is the technique or method of book-keeping which recognizes the fact that every financial transaction has two aspects and records two aspects of each transaction simultaneously in two separate account giving their names 'debit' and 'credit' respectively.