What is Double Entry System in Accounts

 Double entry system owes its origin to an Italian merchant name Luco Pacioli who wrote the first book entitled ‘De computis et Scripturis’ on double entry accounting in the year 1494 we have seen earlier

that in Double entry system of accounting or Bookkeeping that Every business transaction has two aspects, i.e., when we receive something, we give something else in return. For example, when we purchase goods for cash, we received goods and give cash in return similarly in a credit good, goods are given to the customer and the customer becomes debtor for the amount of goods sold to him This method of writing every transaction in two accounts is known as Double Entry System of Accounting. Of the two accounts, one account is given debit while the other account is given credit with an equal amount. Thus on any date, the total of all debits must be equal to the total of all credits because every debit has corresponding credit. 

The factor common in double entry system 

To have a clear understanding of the double entry system, it is necessary to keep in mind the following factors which are common to every business :

• The business has to enter into business dealings with a number of persons or firms. Therefore, to keep a record of each asset of the business an account of each person or firm, with whom the business has business dealings, is opened. Such accounts are known as a personal account
• The business must necessarily have some assets such as stock, cash, furniture, etc. with the help of which the business may be carried on. Therefore, an account of each asset in the business is opened for keeping a record of each asset of the business. Such accounts are classified as real or property accounts. 
• There must be certain sources from which the income of the business is derived. Similarly, certain expenses are incurred to earn income. Therefore an account of each expense and income is opened in the books for ascertaining profit and loss of the business for a particular period. Such accounts are known as Nominal Account.

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