Introduction to Accounting — Account STD 11 Commerce — Question

Double Entry System of accounting is a system of accounting under which both, debit and credit, aspects of accounting are recorded. A transaction has two aspects Debit and Credit and at the time of recording a transaction, one aspect is recorded on the debit side and other aspect is recorded on the credit side. For example, at the tirr e of cash purchases, goods are received and in return cash is paid. In the transaction, two aspects are involved, i.e., receiving goods and paying cash and under the Double Entry System, both these aspects are recorded. One part, i.e., the receipt of goods, is debited and the second part, i.e., payment of cash, is credited. In other words, if only two accounts are affected (as in the purchase of building for cash), one account, Builcing, is debited and the other account, Cash, is credited for the same amount. If more than two accounts are affected by a transaction, the sum of the debit entries must be equal to the sum of the credit entries. Thus, on any day, total amount debited is equial to the total amount credited.
Thus, we can define Double Entry System as: "The system which recognises and records both aspects of a transaction. The Double Entry System has proved to be a scientific and complete system of accounting.”