What is double entry accounting?

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What does double entry accounting system actually means? What are the rules that I learn for the double entry accounting? What are debits and credits?

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score 0 · Answer 1 · 2012-12-02T18:56:52+00:00

For the double entry accounting, you should start from the accounting equation which is:

Assets= Liabilities + Capital

For each transaction that the company makes, there should be a debit and an equivalent credit as the equation needs to always hold.

The following accounts are debited when increases:

Assets, Expenses

The following accounts are credited when increased:
Liabilities, Capital,Revenue

For decreases, it is the other way around.