Get "AccountingCoach Pro" only with $49 (one-time payment) to master this knowledge point. Start our free accounting course Now!
All transactions affect the accounting equation and are recorded in preparing financial statements. But the problem is all the transactions are cumbersome in a practical situation. It’s necessary to summarise all categories of transactions.
So, the double entry system of bookkeeping is appeared.
It involves the use of journals and ledger accounts.
Every transactions affects two items in the process of prepaing financial statements. Follow the rules of double entry, every time a transaction is recorded, both aspects must be taken into account. One aspect is referred to the debit side of entry (Dr), the other is referred to the credit side of the entry (Cr).
Each aspect is recorded in the corresponding ledger account. Each account has two sides: the debit side and the credit side. That means the total debits of the transaction occurred in an accounting period is equal to the total credits. But how to count them? You should know the trial banlance.
Related posts:
