Question

State the advantages of the double-entry system.

Answer 1

1. According to this system, every transaction has a two-fold effect. That is, there are two aspects involved, namely, receiving aspect and the giving aspect.
2. It is denoted by debit (Dr.) and credit (Cr.).
3. The basic principle of the double-entry system is that for every debit there must be an equivalent and corresponding credit.
4. Debit denotes an increase in assets or expenses or a decrease in liabilities, income, or capital.
5. Credit denotes an increase in liabilities, income, or capital or a decrease in assets or expenses.