Accounting is the act of systematically keeping records of economic transactions and providing results on that basis. The accounts are arranged in such a way that the results of financial transactions can be obtained. In today’s modern age, the development of technology has made it easier and simpler to keep accounts.
Objectives of accounting
- Keep every transaction properly,
- Protect and control property·
- Keep records in a scientific and systematic way,·
- Making reports for different periods, To show progress clearly,
- To be used as evidence for dispute resolution,
- To find profit and loss and bring financial transparency through audit,
Double-entry accounting system
- When keeping accounts of any financial transaction, the system of keeping records on both sides including the debit side of one account and the credit side of another account is called a double-entry accounting system.
- The double-entry accounting system was developed with the objective of removing the weaknesses seen in the single-accounting system
- The double accounting system was formulated in 1494 AD by the Italian mathematician Luca Paceielli. In his book Summa de Arithmetica, he outlined the “principle of double-entry system” .
- Accounting according to the double accounting system is based on the universal principles of accounting. This accounting system is considered to be completely scientific and the best accounting system
- .According to this principle, every transaction has to be debited and credited.
- The double-entry accounting system is a method of keeping complete, scientific, best, modern, and universally accepted accounting records. This affects the double side debit and credit of each transaction, which is called the double-entry accounting system.
Characteristics of double-entry accounting System
- According to the double-entry accounting system, a transaction has a bilateral effect.
Same but opposite effects
- Under the double-entry accounting system, the same transaction affects two accounts equally. Keeping an account of the same amount is a feature of the double-entry accounting system.
- Accounts for all types of transactions are kept under the double-entry accounting system. It is kept in accordance with the principles of the double-entry accounting system.
Mathematical accuracy check
- According to the principles of the double-entry accounting system, the transaction amount is equal to the debit and credit, which makes it easier to check the mathematical accuracy of the transaction.
Complete scientific system this principle has its own values and rules. Since systematic accounting of transactions is kept on the basis of this belief, it can be called a complete scientific system.
Objectives of double-entry accounting system
- To keep a record of business transactions
- To find out the profit and loss of the business depicts the financial condition of the organization at any given time through the balance sheet.
- To provide business-related information in time of need
- To help you find and correct various types of mistakes