Double-entry bookkeeping

An accounting system that records each transaction in at least two accounts, with total debits equal to total credits. It makes the effects of transactions visible across an organization’s financial records.

Debit and credit: The two sides of an accounting entry, used to record increases and decreases in accounts according to account type. Every transaction’s entries use these two sides, whose totals must match.
Assets: Resources controlled by an entity that are expected to provide future economic benefits. Asset accounts record resources affected by transactions such as purchases and collections.
Luca Pacioli: An Italian mathematician and Franciscan friar whose 1494 book described Venetian merchants’ double-entry bookkeeping practices. His printed account helped disseminate a system already used by merchants.
Financial statements: Formal reports summarizing an entity’s financial position, performance, and cash flows. Ledger balances produced by double entry supply figures for these reports.
Single-entry bookkeeping: A bookkeeping approach that records selected transactions in a single set of records without requiring equal debit and credit entries. It lacks the paired-account structure that defines double entry.
Chart of accounts: An organized list of the accounts an entity uses to classify and report financial transactions. It determines where each side of a transaction is recorded.
Liabilities: Present obligations of an entity arising from past events, whose settlement is expected to require resources. Liability accounts capture debts created or settled through paired entries.
Summa de arithmetica: A 1494 mathematical compendium by Luca Pacioli that includes a description of Venetian bookkeeping. Its bookkeeping section is an early influential printed exposition of double entry.
Accrual accounting: An accounting method that records revenues when earned and expenses when incurred, rather than only when cash moves. Paired entries let accruals record obligations and earnings without immediate cash movement.
Cash accounting: An accounting method that records transactions when cash is received or paid. It differs in timing rules, while double entry describes how transactions are recorded across accounts.

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