Double match

accounting

The double entry system is an accounting method that consists of recording an operation twice, once in debit and once in credit. In this way, relationships are established between the different patrimonial masses.

Accounting operations are carried out through so-called entries. These have two parts, the debit and the credit. In this way, by this method, every input operation entails an output operation. Or what is the same, every debtor has a creditor as a counterpart. It should be clarified that the positive values ​​go in the debit and the negative values ​​in the credit, in turn, with a positive sign. In the final example we will see it more clearly.

The history of double entry

Accounting as a science went hand in hand with commerce, livestock and agriculture or industry. Accounting records were even found among the Egyptians and, of course, among the Romans. In addition, the origin of money was a necessary step for its development, since barter did not require any annotation.

However, Fray Luca Bartolomeo de Pacioli was the father of the double game. During the Venetian Renaissance he developed a system based on another used by merchants of the time. In his treatise he already advised the use of daily books, ledgers, balances and inventories. His contributions started modern accounting.

The principles of the method. The accounting entry

This method of recording operations is based on a series of principles that were developed by Fray Luca Bartolomeo and that we show below:

  • The one who receives is the debtor and the one who delivers is the creditor. In this way, what we have is because we owe it to someone, including ourselves.
  • Equity balance requires that everything that goes in must be equal to what goes out.
  • Resources always come from somewhere. The debtor (who owes) exists because there is a creditor (who has).
  • Accounts must be able to be canceled in the same way they are created. In this way, if a value enters through one, it must exit through it.

The practical reflection of this method are the daily and ledger books, as well as the balance sheet composed of an asset and a liability. In this way, the accounting entry is the way to record operations in the journal and has a debit (on the right) and a credit (on the left). Any annotation on one side has a counterpart on the other. The largest, with the same format, collects the operations in the same account.

Finally, the balance sheet reflects the economic and financial structure of the company. It has an asset with assets and collection rights and a liability with equity and payment obligations. It is a reflection of the company in its true image and serves for the decision-making of the different economic agents.

Practical example

Let's imagine a simple example. The company starts from a balance sheet at 31/12 / X1. This meets the principles of double entry, assets equals liabilities. Collection rights (fixed assets, customers and banks) equal to payment obligations (equity, liabilities, creditors and suppliers) or, in other words, what we have equal to what we owe. We owe our net worth to ourselves.

The entry shows how a transaction consisting of the payment of € 800 to one of our suppliers is recorded: the bank on the balance sheet is on assets and the supplier on liabilities. By writing them down on the opposite side, the bank to credit and the supplier to debit, we are reducing them. The new balance shows the values ​​reduced by € 800 in both assets and liabilities.

The ledger reflects the movements of a single account. We have used the provider as an example. We see that part of a balance, the first balance and has a movement to the debit of € 800 for the payment. Your final balance is creditor (the credit is still higher) for 400 euros. This would be the difference between the sum of the debit and credit columns.

As we can see, it is an effective way to record accounting operations in a company or institution. The whole process is related and affects the assets of the company in the same way. But also, it does it twice, hence its name.

Tags:  Argentina Commerce passes 

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