Double Entry System — Flashcards

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The double entry system is a system of accounting under which every transaction is recorded in at least two accounts, once as a debit and once as an equal credit. It records both aspects of a transact…

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It is complete because every business transaction is recorded from both sides: the receiving aspect and the giving aspect. This means no transaction is recorded only partly. For example, when cash com…

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Every business transaction has two aspects: the receiving aspect and the giving aspect. The account that receives the benefit is debited, and the account that gives the benefit is credited, according …

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A trial balance can be prepared because total debits must equal total credits in the double entry system. This equality helps check arithmetical accuracy of the accounts.

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No. Certain errors may not be detected even under the double entry system. Errors of principle, errors of omission, and compensating errors may remain undetected by a trial balance.

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A Personal Account is a traditional account type for persons, firms, companies, and institutions. Its rule is: Debit the Receiver and Credit the Giver. Personal accounts have three subtypes: natural, …

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Personal accounts have three subtypes: natural personal accounts, artificial personal accounts, and representative personal accounts. Natural accounts are for human beings, artificial accounts are for…

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A Real Account is a traditional account type for tangible and intangible assets. Its rule is: Debit what comes in and Credit what goes out. Real accounts have two subtypes: tangible and intangible.