Double entry bookkeeping was first introduced by an Italian mathematician and a monk Luca Pacioli in his famous book Summa de arithmetica, geometria, proportions et proportionality. The book was published in the 15th century and it described the method of accounting used by Venetian merchants of the time. Double entry book-keeping became the standard method of accounting (in Finnish = kirjanpito)
very soon, and Pacioli's book became a bestseller.
Double entry bookkeeping is a system where each transaction is recorded twice into the columns on the sheets of the ledgers. These columns were named debit and credit, the first being the left side column and the other one the right side column. The basic idea is to follow two different financial transactions: where the money has come from and where it has been spent. In double entry bookkeeping the money spent is also the money which is staying in the company account for the time being as well.
All transactions must be recorded in both columns and that serves as a check for any mistakes or errors since the sum of total credits and total debits of different accounts must equal and if not, there are errors. In case of this, the debit and the credit can be traced back with the help of the marking of the date and identifying code which is usually attached to the record.
Double-entry bookkeeping is a system where each transaction is recorded twice into the columns on the sheets of the ledgers. These columns were named debit and credit, the first being the left side column and the other one the right side column.
The basic idea is to follow two different financial transactions: where the money has come from and where it has been spent.
Double entry bookkeeping features two different kinds of approaches
to accounting, named Traditional Approach and Accounting Equation Approach. The accounting equation approach, which is also called the American approach, transaction records are based on the equation Assets=Liabilities + Capital. These columns were named debit and credit, the first being the left side column and the other one the right side column. The basic idea is to follow two different financial transactions: where the money has come from and where it has been spent.
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