Double-entry bookkeeping (debit and credit) is a standard method for recording business transactions and accounting transactions worldwide.
Double entry bookkeeping was first developed by merchants in Florence in the 1200s, but the method was not widely known before 1494 when Italian Luc Pacioli presented method. Luc Pacioli method presented in his book Summa de arithmetica, Geometria, proportionate and proportionality, where the arrangement of accounting transactions, ie accounting, was one of the topics described in the book. Hence usually double entry also called Italian records.
A bookkeeping account has two sides, and debetsida (debit) the left side and credit side (credit) right. If a bookkeeping account is drawn up so it looks like a T, which has contributed to a bookkeeping account called a “T-account”.
– an accounting entry on debetsidan (debit) implies an increase in the availability, equity or debt.
– an accounting entry on kreditsidan (crediting) a reduction in the availability, equity or debt.
The principle of double entry is based on each business event must posted on at least two different accounting accounts and on different sides of the respective account. This means that a debit to an account must lead to at least a credit in another account, and vice versa.
The sum of all debits must always be equal to the sum of the entries made, ie the difference between and debit and credit should always be zero. This is the the self-controlled portion of the method and made it the standard throughout the world.
Learn more about kontoklasser and BAS nomenclature which is the foundation of today's accounting.