The following are the main features of double-entry book-keeping system
1. Two Aspects
The double-entry book-keeping recognizes that every transaction has two aspects. It is based on the fact that a transaction is an exchange and every exchange involves either two things, or two persons, or a thing and a person. Furthermore, if business makes a transaction, the business will be either the benefit receiver or benefit giver.
2. Debit And Credit
The double-entry book-keeping system provides the two aspects of the transaction with the names 'debit' and 'credit' respectively. For example, the benefit receiver is given the name 'debit' and the benefit giver is given 'credit'. Thus, for each transaction, one aspect is debited and another aspect is credited.
3. Two Fold/Double Effect
The double-entry book-keeping system records two-fold or double effect of every transaction. This implies that the two aspects of a transaction are recorded on two opposite sides of two separate accounts. For example, if cash of $1000 is received by a business from Tom, one aspect of the transaction is recorded on the debit side of the cash account and other aspect is recorded on the credit side of Tom's account in the book of the business.
4. Equal Effect
The double-entry book-keeping system shows an equal effect of the two aspects of a transaction. This implies that the amount of one aspect of a transaction is always equal to the amount of other aspect. It, therefore, follows that for every debit amount there is an equal credit amount which means ' for every debit there is a corresponding credit or vice versa'.
1. Two Aspects
The double-entry book-keeping recognizes that every transaction has two aspects. It is based on the fact that a transaction is an exchange and every exchange involves either two things, or two persons, or a thing and a person. Furthermore, if business makes a transaction, the business will be either the benefit receiver or benefit giver.
2. Debit And Credit
The double-entry book-keeping system provides the two aspects of the transaction with the names 'debit' and 'credit' respectively. For example, the benefit receiver is given the name 'debit' and the benefit giver is given 'credit'. Thus, for each transaction, one aspect is debited and another aspect is credited.
3. Two Fold/Double Effect
The double-entry book-keeping system records two-fold or double effect of every transaction. This implies that the two aspects of a transaction are recorded on two opposite sides of two separate accounts. For example, if cash of $1000 is received by a business from Tom, one aspect of the transaction is recorded on the debit side of the cash account and other aspect is recorded on the credit side of Tom's account in the book of the business.
4. Equal Effect
The double-entry book-keeping system shows an equal effect of the two aspects of a transaction. This implies that the amount of one aspect of a transaction is always equal to the amount of other aspect. It, therefore, follows that for every debit amount there is an equal credit amount which means ' for every debit there is a corresponding credit or vice versa'.
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