The double entry system of bookkeeping is a method of recording transactions based on a set of rules. Every transaction has two impacts, a Debit and a Credit. The rule is that “for every debit, there is corresponding credit and for every credit, there is a corresponding debit”. It is based on the accounting equation; Assets = Liabilities + Equity.
Key learning objectives:
What are the rules of the double entry accounting system?
What is the impact of double entry accounting on the different elements of the financial statements?