Accounting

Accounting covers the principles and practices of financial reporting, analysis, and management.

Introduction to AccountingFinancial StatementsDouble-Entry Bookkeeping
Financial Analysis and RatiosManagerial AccountingAccounting for Assets and Depreciation
Budgeting and ForecastingTax Preparation and ComplianceUsing Accounting Software
Exam-Ready Study HabitsTackling Accounting Problems
Introduction to Acco...Financial StatementsDouble-Entry Bookkee...Financial Analysis a...Managerial Accountin...Accounting for Asset...Budgeting and Foreca...Tax Preparation and ...Using Accounting Sof...Exam-Ready Study Hab...Tackling Accounting ...
Basic Concepts

Double-Entry Bookkeeping

The Golden Rule

Double-entry bookkeeping is the foundation of modern accounting. Every transaction affects at least two accounts—one is debited, and one is credited. This keeps the accounting equation balanced.

How It Works

  • Debits and Credits: For every dollar that goes out, a dollar comes in somewhere else.
  • The Accounting Equation: \( \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \)

Why Use Double-Entry?

It reduces errors and helps catch mistakes. If the books don’t balance, something is wrong!

Real-World Impact

From buying supplies to paying salaries, every business uses double-entry to keep track of where money is going and coming from.

Examples

  • When a business buys inventory with cash, one account (inventory) increases, and another (cash) decreases.

  • A company sells a product and records both the sale (revenue) and the money received (cash or accounts receivable).

In a Nutshell

Double-entry bookkeeping means every transaction is recorded twice, keeping accounts balanced.

Key Terms

Debit
An entry on the left side of an account, increasing assets or decreasing liabilities.
Credit
An entry on the right side of an account, increasing liabilities or decreasing assets.
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Financial Analysis and Ratios