Double-entry bookkeeping
Double-entry bookkeeping requires every transaction to be recorded in at least two accounts, with total debits equalling total credits. The rule keeps the accounting equation — assets equal liabilities plus equity — permanently in balance.
Also known asdouble entry
FrameworkDouble-entry bookkeeping
See it move
The flow diagram traces a single transaction — borrowing €10,000 from a bank — through four sequential stages. First the transaction arises; second, Cash is debited +€10,000 (the asset rises); third, Bank Loan is credited +€10,000 (the liability rises); fourth, the diagram confirms that debits equal credits and the accounting equation stays balanced. The connectors label the three transitions: the entry always touches two accounts, records equal amounts in each, and the balance always holds.
Check yourself
Verdana SA pays €4,500 cash to settle an accounts payable balance in full. Which statement correctly describes the effect of this transaction on the accounting equation under double-entry bookkeeping?