Accountancy · Chapter 8
Study notes aligned to the official NEB syllabus.
The modern and scientific system of recording the different financial transactions is the double entry system.
According to Lewis and Gillespie, "The specific technique which reflects the concept of duality is known as double entry book keeping."
According to William Pickles, "The double entry system seeks to record every transaction in its double aspects, the receipt of a benefit by one account and the surrender of a like benefit by another account, the former entry being to the debit of the account receiving and the latter to the credit of the account surrendering."
According to Mumro and Palmer (as stated in the source), "Every transaction involving money or money's worth has a two fold aspect, the receiving of a value on the one hand and giving of the same value on the other. This two fold nature in all transactions must be recorded in the books and this gives rise to the term Double Entry Book Keeping."
The features of the double entry system are as follows:
a) Dual/two fold effects In the dual system, different financial transactions are recorded by affecting both parties.
b) Equal effects The transaction must be equal in terms of monetary value under the double entry system.
c) Guided by specific rules This system is guided by certain specified rules of debiting and crediting an account. They are regarded as the rules of debit and credit.
d) Debit and Credit side In this system, there are two parts: the left part of the account is called the debit side and the right part is called the credit side. In maintenance of records, if any amount is entered on the debit side of one account, then the same amount is entered on the credit side of another account.