Double Entry System - QS Study
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Double Entry System

The double entry system of accounting means that each trade transaction will engage two accounts (or more). In short, the essential principle of this system is, for every debit, there must be a corresponding credit of equal amount and for every credit, there must be a corresponding debit of equal amount. For example, when a company borrows money from its bank, the company’s Cash account will enlarge and its liability account Loans Payable will raise.

There are several transactions in a business apprehension. Each transaction, when intimately analyzed, reveals two features. One portion will be “receiving aspect” or “incoming aspect” or “expenses/loss aspect”. This is termed as the “Debit aspect”. These two aspects namely “Debit aspect” and “Credit aspect” forms the basis of Double Entry System. The double entry system is so named since it records both the aspects of a transaction.


  • Assists in arranging trial balance which is a analysis of mathematical correctness in accounting.
  • Preparation of closing accounts with the assist of trial balance.
  • It is based upon accounting hypothesis concepts and principles.
  • Each business transaction involves two accounts.
  • Every transaction has two portions, i.e., debit and credit.