It’s very interesting that the accounting system used today “double
entry accounting” developed so long ago and how we us double entry accounting
as a way of checks and balances.
Debts must = credits.
To give an example of how this works.
I go into a store and buy a coke.
Seller is now one drink short but on the other side they now have an increase of cash. Both records need to be recorded 1) the coke can 2) the cash (double entry) to give a balanced approach. This provides a means of checks and balances (debts must = credits) Balanced.
If we only recorded one side of this it would give us an incomplete picture.
To give an example of how this works.
I go into a store and buy a coke.
Seller is now one drink short but on the other side they now have an increase of cash. Both records need to be recorded 1) the coke can 2) the cash (double entry) to give a balanced approach. This provides a means of checks and balances (debts must = credits) Balanced.
If we only recorded one side of this it would give us an incomplete picture.
I can see how the systems balance is recorded through the
two books journal and Ledger and then checked with a trial balance worksheet.
This system seems very logical to me.
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