The double entry system of accounting
The double entry system was invented by a trader called LUCAPACIOLI of Italy. . According to him, every transactiontakes place between two persons or two firms / enterprises. When suchtransaction takes place one person receives the benefit and the other persongives the benefit.
These two benefits are inseparable. Hence, we can not thinkof one transaction leaving the other. If one person is receiving the benefitmeans that some other person is giving the befit. In accountancy the receivingthe benefit is referred as debit aspect and giving benefit is called creditaspect. Thus the procedure of recording both the receiving and giving aspectsrelated to business transaction is called Double Entry System. For example, afirm purchases Machine for 80,000. the firm receives machine hence, Machine isDebit and the firm is giving cash hence cash is going out, so credit. In thisway for every transaction one account is debited and other account is credited.This principle is known as Principle of double entry. This means for everyDebit or Credit, there will be corresponding Credit or Debit respectively. Thisis the main feature of Double Entry System.