Double Entry SystemDouble entry system states makes sure that every financial transaction has equal and opposite effects in at least two different accounts. Assets= Liabilities + Equity is satisfied by using the double entry. In the double-entry system, there will be at least two accounts which is “debit “entry and “credit” entry. The items that will be recorded in the debit side are assets and expenses. Assets are the property owned by the company or someone. Expenses are the resources that have been consumed in a business.
At the credit side, we have liabilities, equity and revenue. Liabilities are the supply of resources supplied by outsiders. The equity refers to resources provided by the owner him or herself for business uses.
The revenue refers to the total income received by the business. The rules of double-entry system describe that all the transactions have at least two accounts which must have at least one debit and one credit entry and the total debits must be equal to the total credit. The double-entry particulars refer to the name of other account where the other entry in the double-entry is recorded.