What is Double Entry Book-Keeping? & Features

The field of bookkeeping teaches us how to keep records of financial transactions. Two types of accounting are used for book-keeping. Double Entry System and single entry methods are employed. Each transaction involving a supplier, a customer, or cash is recorded only as an account or effect. These two aspects of a transaction are ignored. This system of recording business transactions is incomplete, inaccurate, and unscientific.

What is Double Entry System?

Financial transactions are recorded using a modern and scientific double entry system. This system recognizes that all business transactions have two aspects. Using this system of book keeping, both debits and credits must be recorded.

Double entry systems follow the golden rule that there must be an equal and opposite credit for every debit. There are two parties involved in every transaction, one being the giver and the other being the receiver. The giver deducts from the receiver and the receiver credits the giver. Accounts of receivers are debited and the headcount of givers are credited.

Features of Double Entry System

These are the features of double entry system.

Double Effect

In double entry book-keeping system, every transaction has two fold effects i.e. debit and credit. Thus, the double aspects of a transaction are recorded in opposite side of two different accounts.

Equal Effect

The amount of debit and credit aspects must be equal in term of monetary value. The same amount of a transactions is shown in two books on opposite sites.

Classification of Account

Under this system, accounts are classified into three categories as personal, real and nominal accounts. Nature and rules of debiting and crediting under these accounts are different.

Transfer of Ownership

Another feature of this system is transfer of ownership from one person to another in case of a transaction. For example, when Mina Sells goods to Rina, the ownership of goods is transferred from Mina to Rina, but ownership of cash is transferred from Mina to Rina.

Checking of Mathematical Accuracy

Since the same amount is recorded on the debit and credit side of two separated books, the total amount of debit is always equal to the credit. It helps to find out the arithmetical accuracy of the account records by preparing a trial balance.


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