Introduction to Double Entry Book Keeping

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Introduction to Double Entry Book Keeping

This part is concerned with the basic principles underlying the double entry system of bookkeeping. We have found a document via which any student can learn about the Double Entry Book Keeping. Bookkeeping is a very basic concept in accounting and all the students should know about it. You can download the document by click on the link given below

What is an accounting?

What do you think of when you read or hear the word, ‘accounting’? What do you believe it means or represents?
If you have already attended some accounting classes or if you have spoken to someone who knows something about accounting, you will probably have a fairly good idea of what accounting is and what it is used for. If not, you may find it useful to have this knowledge before you start studying the subject. During the course of the next few pages, let’s see if you can gain that knowledge and learn what accounting is.

Accounting can be defined as:

The process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of that information.

The objectives of accounting:

Accounting has many objectives, including letting people and organisations know:

  • if they are making a profit or a loss;
  • what their business is worth;
  • what a transaction was worth to them;
  • how much cash they have;
  • how wealthy they are;
  • how much they are owed;
  • how much they owe to someone else;
  • enough information so that they can keep a financial check on the things they do.

Introduction to Double Entry Book Keeping

However, the primary objective of accounting is to provide information for decision-making. The information is usually financial, but can also be given in volumes, for example, the number of cars sold in a month by a car dealership or the number of cows in a farmer’s herd. So, for example, if a business recorded what it sold, to whom, the date it was sold, the price at
which it was sold, and the date it received payment from the customer, along with similar data concerning the purchases it made, certain information could be produced summarising what had taken place.

The profitability of the business and the financial status of the business could also be identified, at any particular point in time. It is the primary objective of accounting to take such information and convert it into a form that is useful for decision-making.

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