Double entry book-keeping – Part A records every transaction twice — one debit and one credit of equal value — in ledger accounts.
The rules of double entry
Debit: an increase in an asset or expense
Credit: an increase in a liability, capital or income
Each account has a debit side (left) and a credit side (right). For example, buying goods for cash: debit Purchases, credit Cash.
Remember
- Debit increases assets and expenses; credit increases liabilities, capital and income.
- Every transaction is recorded in two accounts.