Double-entry bookkeeping is a foundational concept in accounting that ensures accurate financial record-keeping for businesses. Here's a breakdown:
- Double-entry bookkeeping is based on the principle that every transaction affects at least two accounts.
- Two Entries: For every transaction, there are two entries made:
- Balancing: Every transaction must maintain the accounting equation:
- Assets = Liabilities + Equity. In double-entry bookkeeping, the sum of all debits must equal the sum of all credits, ensuring that the books are always balanced.
- Accuracy and Transparency: Double-entry bookkeeping provides a clear trail of every financial transaction, making tracking and analysing business activities easier. It also helps identify errors since every entry has a corresponding opposite entry.
In tennis, a "double fault" occurs when a player fails to get both of their serves into the opponent's service box and is often seen as a mistake. Similarly, in business, avoid them by 'serving your accounts accurately' otherwise you are giving valuable 'points' away.
