Double-entry bookkeeping - Financial definition
Concise definition of the term double-entry bookkeeping
Double-entry bookkeeping is a system of accounting in which every entry to one account requires a corresponding and opposite entry to a different account.
Comprehensive definition of the term double-entry bookkeeping
The total of credits and the total of debits always need to match, both in an individual journal entry and in the financial statements themselves.
Debits and credits are numbers recorded as follows:
- Debits are recorded on the left side of a ledger account, a.k.a. T account. Debits increase balances in asset accounts and expense accounts and decrease balances in liability accounts, revenue accounts, and capital accounts.
- Credits are recorded on the right side of a T account in a ledger. Credits increase balances in liability accounts, revenue accounts, and capital accounts, and decrease balances in asset accounts and expense accounts.