Double Entry Bookkeeping System - Explained
What is a Double Entry Bookkeeping System?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is Double Entry Bookkeeping?How is a Double Entry Bookkeeping System Used?Academic Research on Double Entry Bookkeeping
What is Double Entry Bookkeeping?
It is a type of bookkeeping and accounting practice where every transaction is recorded twice in the account book, once as the debit and again as credit. The total debit account and the total credit account should be equal if all the entries are correctly made. This system allows for a constant balancing of accounts.
Back to: ACCOUNTING, TAX, & REPORTING
How is a Double Entry Bookkeeping System Used?
Double entry bookkeeping is the norm worldwide, except for in very small and cash-transaction based firms. It is an effective practice for maintaining an accurate financial statement and detecting the errors becomes easier with this practice. It was invented by the Venice Merchants in the 13th century, later Italian monk Luca Pacioli formalized it in his book 'Summa de Arithmetica, Geometrica, Poroportioni et Proportionaltie.' Debit and credit are two essential components of double entry. In accounting, the debit accounts are recorded at the left-hand side of the account ledger and the credit accounts are recorded at the right-hand side of an account ledger. The sum of debit must be equal to the sum of credit. This accounting method asserts the dual nature of every financial transaction, the source, and the disposition. It satisfies the equation Assets = Liabilities + Owners Equity.
Academic Research on Double Entry Bookkeeping
- Accounting for rationality:Double-entry bookkeeping and the rhetoric of economic rationality, Carruthers, B. G., & Espeland, W. N. (1991). American journal of sociology,97(1), 31-69. This article addresses claims made by Weber, Schumpeter, and Sombart concerning the importance of double-entry bookkeeping. The conclusion is that the significance of double-entry bookkeeping can be appreciated only if its rhetorical and technical aspects are considered.
- Double-entry bookkeepingand the birth of capitalism: accounting for the commercial revolution in medieval northern Italy, Bryer, R. A. (1993).Critical perspectives on Accounting,4(2), 113-140. This paper explores the history of double-entry bookkeeping in ancient Italy. The objective of this article is to show how much double-entry bookkeeping influenced calculations on interest rates and returns. It also provides some suggestions on how to improve this accounting system.
- Origin and evolution ofdouble entry bookkeeping, Peragallo, E. (1938). This article examines the origin of bookkeeping and the double-entry accounting system. Emphasis is placed on 14th century Italy.
- The historical significance of double-entry bookkeeping: Some non-Sombartian claims, Yamey*, B. S. (2005). Accounting, Business & Financial History,15(1), 77-88. This paper explores the Werner Sombart view on the connection between double-entry bookkeeping and the rise of capitalism. It also examines other non-Sombartians views in relations to capitalism.
- Early double-entry bookkeeping and the rhetoric of accounting calculation, Thompson, G. (1994). Accounting as social and institutional practice,24, 40. This paper explores the various ways in which accounting is approached. The authors aims to drive his point by using as much approaches as possible.
- Accounting change in central government: the adoption of double entry bookkeepingat the Portuguese Royal Treasury (1761), Gomes, D., Carnegie, G. D., & Lima Rodrigues, L. (2008).Accounting, Auditing & Accountability Journal,21(8), 1144-1184. This paper explores the adoption of the double-entry bookkeeping method by the Royal Treasury of Portugal in 1761. This paper highlights the different improvements that this accounting system brought to the nation's public administration.
- Notes on the origin of double-entry bookkeeping, Yamey, B. S. (1947). The Accounting Review,22(3), 263-272. The author provides different notes which he believes might help in deciphering the history of the double-entry bookkeeping system.
- British central government and the mercantile system of double entry bookkeeping: a study of ideological conflict, Edwards, J. R., Coombs, H. M., & Greener, H. T. (2002). Accounting, Organizations and Society,27(7), 637-658. This research examines the contention between various individuals and rival parties about the design of the double-entry system for the British Royal Treasury. Different ideas were proposed by the rival groups as to how the double-entry accounting system should be implemented. This article shows the different views and points of both rival groups.
- Introducing double-entry bookkeepingin public finance: a French experiment at the beginning of the eighteenth century, Lemarchand, Y. (1999). Accounting, Business & Financial History,9(2), 225-254. This article shows the factors which led to the introduction of the double-entry system in Medieval France. It also highlights the different barriers faced in bringing this system into all French accounting administrations.
- The genesis of double entry bookkeeping, Sangster, A. (2015). The Accounting Review,91(1), 299-315. This article aims to show the reason why the double-entry bookkeeping system was shifted from a mechanical task to a skilled craft, which in turn brought about the accounting profession. Results show that the emergence of the double-entry system is one of those reasons. The objective of this paper is to show the different factors which led to the high demand of the double-entry system.
- Scientific bookkeeping and the rise of capitalism, Yamey, B. S. (1949).The Economic History Review,1(23), 99-113. This paper examines different believes and hypothesis about the benefit of the double-entry bookkeeping to an entrepreneur. It also goes on to support the notion set up by various economists like Max Weber which states that double-entry bookkeeping is one of the main factors which led to the rise and development of capitalism.