Double-Entry Bookkeeping
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Accounting Glossary
- Accounting 101
- Accounting Software
- Accounts Payable
- Accounts Receivable
- Accrual Accounting
- Adjusted Trial Balance
- Amortization
- Audit
- Bad Debt Expense
- Balance Sheet
- Bank Reconciliation
- Benefits
- Bonds Payable
- Book Value
- Capital Asset
- Cash Basis Accounting
- Cash Flow
- Cash Flow Statement
- Chart of Accounts
- Class Tracking
- Comprehensive Income
- Contingent Liability
- Contractor vs Employee
- Cost of Goods Sold (COGS)
- Cost of Sales
- CPA, Controller, CFO
- Credits and Debits
- Current Ratio
- Debt to Equity Ratio
- Deferred Revenue
- Depreciation schedule
- Direct Cost
- Double-Entry Bookkeeping
- Earnings Before Interest and Taxes (EBIT)
- Equity
- Financial Reviews
- Fiscal Policy
- Fiscal Year
- Fixed Cost
- GAAP
- General Ledger
- Gross Margin
- Gross Profit
- How to Calculate Income
- Income Statement
- Indirect Cost
- Internal Control
- Inventory
- Journal Entry
- Liability
- Liquidity
- Modified Adjusted Gross Income
- Monetary Policy
- Net Income
- Operating Expenses
- Operating Margin
- Payroll Taxes
- Prepaid Expense
- Profit Margin
- P&L Statement
- Retained Earnings
- Return on Investment (ROI)
- Revenue Recognition
- Sales Revenue
- Straight-Line Depreciation
- Tax Liability
- Trial Balance
- Unearned Revenue
- Variable Cost
- Variance Analysis
- Wage Expense
- Working Capital
- Write-Off
- Yield
- Zero-Based Budgeting (ZBB)
Double-Entry Bookkeeping
Double-entry bookkeeping is a comprehensive system in which every financial transaction records at least two accounts.
It operates based on the conventional accounting equation Assets = Liabilities + Equity, ensuring that total debits balance with total credits at any given time. By offering a complete snapshot of financial activities within a single system, double-entry bookkeeping significantly influences the reliability and accuracy of financial statements that businesses present.
Integral to this system are the inherent checks and balances that guard against errors, promote transparency, and enhance the accuracy of financial reporting. In addition to laying a solid foundation for preparing complex financial statements, double-entry bookkeeping supports the audit process by providing a clear trail of all financial transactions. Thus, the system is instrumental for any business in strategic decision-making, facilitating regulatory compliance, and maintaining the integrity of financial records.
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