Double Entry Bookkeeping Flashcards, test questions and answers

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What is Double Entry Bookkeeping?

Double Entry Bookkeeping is a system of accounting for recording financial transactions. It is an important tool for any business, large or small, to track their finances and ensure accuracy in their books. Double Entry Bookkeeping requires that each transaction have two entries one debit entry and one credit entry. This means that when a company records a purchase on its books, they must also record the money they used to make the purchase, resulting in two entries on the books. This system helps companies identify mistakes or errors as well as track their income and expenses more accurately than single entry systems.Double Entry Bookkeeping also allows businesses to create financial statements such as balance sheets and income statements which provide an accurate overview of the company’s finances. With this information businesses can make better decisions about future investments and operations based on what is seen in these documents. Furthermore, double-entry bookkeeping makes it easy to transfer information from one accounting period to another without having to manually enter all of the data again which saves time and money.Overall, double entry bookkeeping is a great tool for any business looking for accurate records of their financial transactions and detailed reports about how money has been spent. The system allows businesses to easily track expenses, create financial statements quickly, identify any errors or discrepancies in their accounts and save time by transferring information from one period to another without having to manually enter it again each time. Double-Entry Bookkeeping provides businesses with an efficient way of tracking finances that will help them stay organized while staying within budget.