Double entry system of book-keeping has emerged in process of evolution of various accounting techniques. It is the most perfect, scientific and complete system of recording business transactions.
Meaning of double entry system :
Double entry system means keeping accounts from both aspects of giving and taking. To what account a certain dealing is given and by what account, the same dealing is taken.
The double entry system is the system which is used in the business world of modern times, since it enables a trader to obtain the maximum information as to his business affairs from his book-keeping records. This system is based upon the fact that each business transaction affects two accounts, one account is that which receives a benefit in the form of cash, goods or services, and the other account shows the corresponding loss or benefit by it.
Definition of double entry system :
Some of the important definitions of double entry system are as follows...
1) J.R.Batliboi :
J.R.Btliboi defined double entry system as, "Every business transaction has a two-fold effect and that it affects two accounts in opposite directions and if a complete record is to be made of each such transaction it would be necessary to debit one account and credit another account. It is this recording of two-fold effect of every transaction that has given rise to the term Double Entry"
2) William Pickles :
William Pickles defined double entry system as,"The Double Entry System seeks to record every transaction in money or Money's worth in its double aspect- the receipt of a benefit by one account and the surrender of a like benefit by another account, the former Entry being to the debit of the account receiving and the letter to the credit of the account surrendering."
-
The double entry system may be divided into three stages :
1. Original record stage :
Initially, all transactions receiving benefit or occurring loss are entered in a book which is called the journal.
2. Classification stage :
The second stage is of classifying the accounts into receiving and giving accounts. That is to say, which account receives a transaction benefit and which account gives that transaction benefit to other. Both these classifications are entered in a book called ledger, in which both the types of accounts find places in their distinct ledger folios.
3. Finality stage :
In the finality stage of accounts, a balance sheet and profit and loss account is prepared. In this sheet transaction are finally sent in profits accounts and loss accounts or the asset accounts and the Beneficiary Accounts and credit or debit balance thereof.
Origin :
Till the year 1544, only one entry system was in vogue throughout the world. In the year 1544, an Italian merchant Lucas Pacioli published His book entitled, "De computes scriptures" on double-entry book-keeping system for the first time. In this book, he exhorted the principal of adaptation of a single business transaction in two sides at one and the same time in the book, one of the receiving account and the other of the giving account. In this book, he had scrutinized his tests of about 400 years back of simple entry book-keeping.
Advantages :
Advantages of Double Entry Book System → Advantages of double entry system
See Also...
Advantages of double entry system
Disadvantages of Single Entry Accountancy
Book-keeping and Accountancy, its utility for Advocates
Meaning of double entry system :
Double entry system means keeping accounts from both aspects of giving and taking. To what account a certain dealing is given and by what account, the same dealing is taken.
The double entry system is the system which is used in the business world of modern times, since it enables a trader to obtain the maximum information as to his business affairs from his book-keeping records. This system is based upon the fact that each business transaction affects two accounts, one account is that which receives a benefit in the form of cash, goods or services, and the other account shows the corresponding loss or benefit by it.
Definition of double entry system :
Some of the important definitions of double entry system are as follows...
1) J.R.Batliboi :
J.R.Btliboi defined double entry system as, "Every business transaction has a two-fold effect and that it affects two accounts in opposite directions and if a complete record is to be made of each such transaction it would be necessary to debit one account and credit another account. It is this recording of two-fold effect of every transaction that has given rise to the term Double Entry"
2) William Pickles :
William Pickles defined double entry system as,"The Double Entry System seeks to record every transaction in money or Money's worth in its double aspect- the receipt of a benefit by one account and the surrender of a like benefit by another account, the former Entry being to the debit of the account receiving and the letter to the credit of the account surrendering."
-
The double entry system may be divided into three stages :
1. Original record stage :
Initially, all transactions receiving benefit or occurring loss are entered in a book which is called the journal.
2. Classification stage :
The second stage is of classifying the accounts into receiving and giving accounts. That is to say, which account receives a transaction benefit and which account gives that transaction benefit to other. Both these classifications are entered in a book called ledger, in which both the types of accounts find places in their distinct ledger folios.
3. Finality stage :
In the finality stage of accounts, a balance sheet and profit and loss account is prepared. In this sheet transaction are finally sent in profits accounts and loss accounts or the asset accounts and the Beneficiary Accounts and credit or debit balance thereof.
Origin :
Till the year 1544, only one entry system was in vogue throughout the world. In the year 1544, an Italian merchant Lucas Pacioli published His book entitled, "De computes scriptures" on double-entry book-keeping system for the first time. In this book, he exhorted the principal of adaptation of a single business transaction in two sides at one and the same time in the book, one of the receiving account and the other of the giving account. In this book, he had scrutinized his tests of about 400 years back of simple entry book-keeping.
Advantages :
Advantages of Double Entry Book System → Advantages of double entry system
See Also...
Advantages of double entry system
Disadvantages of Single Entry Accountancy
Book-keeping and Accountancy, its utility for Advocates
0 comments:
Post a Comment