Question

State the principles of double-entry system of book-keeping.

Answer 1

Following are the principles of double-entry system:

1. In every business transaction, there are two aspects.
2. The two aspects involved are the benefit or value receiving aspect and the benefit or value giving aspect.
3. These two aspects involve a minimum of two accounts; at least one debit and at least one credit.
4. For every debit, there is a corresponding and equivalent credit.
5. If one account is debited the other account must be credited.