This was first developed by a monk to record lists of stocks and transactions
at a monastery, around the year (** check).
With double-entry bookkeeping, a set of accounts it held.
An account may correspond to a bank account, o r may simply record a pool
of funds set aside for a particula r purpose.
All t ransactions are entered twice, as a transfer fro m one account to another.
For e xa mp le, money transferred fro m one bank account to another would be
recorded as two entries, one in the account that the money was transferred
fro m, and another in the account that the money was transferred to.
This would represent an increase in the value of one account, and a reduction
in the value of the other account.
Bank statements are printed fro m the point of vie w of the bank, which is the
opposite of the depositor's position.
Due to this, the common usage of “credit” and “debit” is the opposite of the
strict accounting usage.
In accounting terms, a “debit” is a transaction that increases the value of an
account, while a “credit” is a transaction that reduces the value of an account.
Double-entry bookkeeping is not necessary in order to accurately record the
financia l transactions of a business, and produce financial statements.
However, accounting software, banking and the accounts of large enterprises
often use the double-entry method.
2.1.4. Accrual Accounting
Transactions are recorded using a cash -based method or an accrual method.
This applies whether a single-entry or double-entry method is used to record
Under cash-based accounting, a transaction is record ed on the date that the
payment is made or received.