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Invoicing & accounting

Double-entry accounting

Double-entry accounting records every transaction in at least two accounts — one debit, one matching credit — so the books always balance. Here's how it works.

Quick answer

Double-entry accounting is a bookkeeping method where every transaction is recorded in at least two accounts — one debit and one matching credit of equal value — so the books always balance. For example, paying rent decreases cash and increases an expense by the same amount. This built-in balance makes errors easier to catch and underpins formal financial statements.

The core idea is that money always comes from somewhere and goes somewhere. Every transaction therefore touches at least two accounts: one is debited and another is credited by the same amount. When you total all debits and all credits, they must be equal — if they are not, something was recorded wrong.

This self-checking property is why double-entry has been the standard for centuries. It is also what makes it possible to produce a balance sheet and an income statement that actually reconcile, rather than a single running list of amounts.

Modern accounting software applies double-entry behind the scenes, so you record a plain-language transaction and the debits and credits are posted automatically. The discipline still matters: it is what lets your reports be trusted.

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FAQ

Common questions

What is the difference between single-entry and double-entry accounting?

Single-entry records each transaction once, like a chequebook register. Double-entry records it in two balancing accounts (a debit and a credit), which catches errors and supports full financial statements. Businesses generally use double-entry.

Do I need to understand debits and credits to use accounting software?

Not usually. Good software posts the double-entry automatically from plain transactions. Understanding the principle helps you read your reports and spot when something looks off, but the mechanics are handled for you.

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