Glossary · Bookkeeping basics
Double-entry bookkeeping
Double-entry bookkeeping is the system in which every transaction is recorded in at least two accounts, with equal debits and credits. Because both sides always match, the books stay in balance: assets equal liabilities plus equity. It is the standard method behind every proper accounting system.
Glossary / Double-entry bookkeeping · Also called double-entry accounting, double entry
How it works
Every transaction has two sides. When you buy a $900 printer with cash, you have $900 more in equipment and $900 less in the bank. Recording only the expense, as in a simple cash book, loses half the story. Double entry records both, which is why a balance sheet is possible at all.
The rule that debits equal credits also catches many mistakes. If a total does not balance, something was entered wrong. It does not catch everything: an entry posted to the wrong account, or a transaction left out completely, still balances. That is what bank reconciliation and reviewing the ledger are for.
Worked example: Three everyday transactions
A business takes a $10,000 bank loan, buys $2,500 of inventory on account, and sells $1,000 of services for cash. Each transaction touches two accounts.
After all three, assets are $10,000 + $2,500 + $1,000 = $13,500. Liabilities are $10,000 + $2,500 = $12,500, and equity has risen by the $1,000 of income. $12,500 + $1,000 = $13,500, so the accounting equation still holds.
| Transaction | Debit | Credit |
|---|---|---|
| Bank loan | Bank $10,000 | Loan payable $10,000 |
| Inventory on account | Inventory $2,500 | Accounts payable $2,500 |
| Cash sale | Bank $1,000 | Service income $1,000 |
In AcboBooks
AcboBooks enforces double entry. Invoices, bills, cheques and deposits post both sides themselves, a journal entry will not save unless it balances, and Verify Data runs a read-only check of the whole file and reports any problems it finds.
Related terms
Related on this site
Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
Get started
Books that get the terms right.
AcboBooks is desktop accounting for US and Canadian small businesses, bought once and kept on your own PC.
No card. No account. Nothing to cancel.