Double-Entry Accounting

Double-entry accounting is a system that ensures financial accuracy by recording every transaction in two parts: a debit and a credit. For every financial action, one account is debited (reflecting an increase in assets or expense) while another is credited (showing an increase in liabilities, equity, or income). This method maintains the accounting equation: Assets = Liabilities + Equity, keeping the books balanced and reducing errors. It provides a complete picture of a business's financial health and helps prevent fraud, making it a fundamental principle in accounting practices.