Double-entry bookkeeping

Definition

Double-entry bookkeeping is an accounting system where every transaction affects at least two accounts, with one debit and one credit recorded for each. This method ensures the accounting equation (Assets = Liabilities + Equity) stays balanced after every transaction.

Related terms

Assets: Resources owned by a company that have economic value and can be converted into cash.

Liabilities: Financial obligations or debts owed by a company to creditors.

Equity: The residual interest in the assets of a company after deducting liabilities, representing ownership interest