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Double Entry Bookkeeping Often Overlooked, But Wildly Important

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Double-entry bookkeeping is a method of complete bookkeeping where each transaction has a corresponding and opposing entry to another account. The double-entry bookkeeping system has two equal, and opposing sides called credit and debit. Every debit is paired with an equivalent credit, and the balances of debits and credits are shown on a debit/creditors statement.

EEvery line item in the financial accounts such as Sales, Income, and Expenses has a predetermined number of days during which the information must be entered into the books. Entries are made when a transaction is initiated, whether by a debit or credit transaction. A debit is a change, and a credit is an addition.


An example would be if someone places a dollar bill down on the counter for a cup of coffee. In double-entry bookkeeping, the money will be credited to the seller's account, and the coffee will be debited from the buyer's account. This is a very simple example and illustrates how the balances of debits and credits flow throughout the business. There are several other concepts that will help clarify certain areas of double-entry bookkeeping. Need further clarification? Contact Plentii today!


Double-entry bookkeeping can be broken down into two distinct categories. The first category, and probably the easiest to understand, are maintenance and debits. Maintenance debits occur on payments made to vendors and are usually entered against a monthly or quarterly schedule. A debit increases when the purchase price of an asset increases and decreases when the amount owed on an outstanding loan is repaid.

Credit debits occur when money is withdrawn from the business. Credit debits must be matched up against an outstanding debt and are credited automatically against debits in the financial system. If there is not enough available credit in the business' accounts, the debits will reflect as credits against debits and vice versa. This is where the concept of debit flow and credit flow becomes important.

Double-entry bookkeeping can be broken down into two distinct categories. The first category, and probably the easiest to understand, are maintenance debits. Maintenance debits occur on payments made to vendors, and are usually entered against a monthly or quarterly schedule. A debit increases when the purchase price of an asset increases, and it decreases when the amount owed on an outstanding loan is repaid./p>

Credit debits occur when money is withdrawn from the business. Credit debits must be matched up against an outstanding debt and are credited automatically against debits in the financial system. If there is not enough available credit in the business' accounts, the debits will reflect as credits against debits and vice versa. This is where the concept of debit flow and credit flow becomes important.


Double-entry bookkeeping requires that all transactions are recorded and accounted for in terms of debits and credits. There are several methods that double-entry bookkeepers use. Most commonly, the books are prepared manually and may contain hundreds of different entries for every transaction.

As a result, transactions may be mixed up or confused, and the consequences of any calculations or combinations thereof could be wrong. Plentii understands that using computerized double-entry bookkeeping systems offers a precise record of every transaction and instant access to information about cash flows and other variables that could affect the balance of the accounts.


The double-entry bookkeeping system is not only complex and difficult to learn but also very time-consuming. Computers have dramatically cut down on time needed to enter data into accounts and determine the results. As an example, if a customer buys a quantity of a product and then leaves the store, the debits are not reflected in the accounting system immediately. Instead, the system accesses information about previous purchases and the customer's payment history to determine which debts should be written in and which should be deleted.

After the process is completed, the debits and credits are recorded against debits in the ledger accounts. There are typically two types of entries in the ledger accounts. The first entry is an automatic entry: the date and amount of the sale is entered in the sales account, while the date and price of the product is entered in the inventory account. The second entry is a manual entry. The person who entered the information must sign an agreement with the other party to allow access to their debits and credits.

Many small businesses have decided to outsource the accounting aspects of their operation to a double-entry bookkeeping company like Plentii. Contact us today! In many cases, these companies offer services in-house, at a minimal cost, or for a fee. Double-entry bookkeeping is often used to record bank transactions and to track and file employee records.

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However, there are many other uses for this technique in business, and the most popular reason is use as a tool for planning and organizing the day-to-day operations of a company. This method is highly flexible, allowing any size business to maintain accurate, organized records without the help of a professional accountant.

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Run Your Business. We Do The Math! Get a professional bookkeeper at a price you can afford, zero learning curve, & a signed financial statement by a CPA! Get Plentii Done Today. We do your Bookkeeping & file your Business Tax Returns! We don’t refer you to a Tax Professional after doing your Bookkeeping because we are the Business Tax Returns Expert!
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