Double-Entry Bookking Essay

380 Words2 Pages
1.0 Introduction: Double entry bookkeeping is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. For each economic business changes lead to the amount in two or more related accounts change at the same time. Each entry is recorded to satisfy the equation Assets = Liabilities + Equtiy. In the double entry system, transactions are recorded as debits and credits. For example, we use cash to buy food, we put the “cash” account and “food” account at the same time. The double-entry system of bookkeeping is easy to accurately prepare financial statements directly from the books of account and test errors. 1.1 Background In the late 1400’s, Franciscan monk and mathematician Luca Pacioli documented the procedure for double-entry bookkeeping as part of his famous Summa work, which described a significant portion of the accounting cycle. Double-entry bookkeeping spread throughout Europe and became the foundation of modern accounting. Double-entry bookkeeping shows its significance because industrial revolution might have been impossible without it especially when business increased in size and complexity. Accurate bookkeeping needs managers to understand their financial situations in order to keep them solvent and offer a degree of transparency to investors. While a single-entry system requires skilled bookkeepers which spend plenty of resources , only a double-entry system offers the required detail systematically and decrease the needs of human resources. 2.0 Roles of accountant In recent years, the role of accountants in organizations has changed dramatically. Terms such as "business partner" and "strategic partner" have been coined to emphasize the expanded role accountants are playing in organizations. Accountants are no longer just doing a collection of information for decision-makers, they are

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