Conceptual Review on the Principles of Double Entry

A double entry principle states that for every debit entry there must be a corresponding credit entry. This is the major reason why its ledger account has both a debit and credit side.

Each firm keeping books must have a debit and credit recorded at the time the transaction take place. Therefore the double entry must be made in a firm book i.e. both debit and credit.

The following rules are points for identifying debit and credit items. They should be carefully noted and understood.

  1. Every debit must have a credit and every credit must have a debit, each transaction is recorded twice.
  2. The asset and revenue/income and debit balance while liability and expenses/losses are credit balance.
  3. The receiving account is always debited and the given account is always credited.

A Double Entry Example

The key factor of a double entry system is the presence of a “cash book” account. This account contains the entries made when assets (e.g. money) are taken into a released from the accounting system.

Using the accountant’s T charts to represent this, we use the following example that issues two accounts only. The cash book and an account in the name of Smith.


  1. N300 is entered into this system to be allocated to the Smith account. The N300 is credited to the Smith account (credits are on the right, debits on the left). To match this, a debit of N300 is allocated to the cash book.

  1. To complete the picture N60 is taken out of the system from the Pattel account with a debit from Pattel and a credit to the cash book.

At the end of this, the Smith account balance is N150, Pattel account 40 and the Cash book is N-190, the negative sum of the other account. On this simple basis, very complex asset tracking system can be built.

1 thought on “Conceptual Review on the Principles of Double Entry”

  1. Fildena 25 Mg | Solve Erection Problem | Fortune Healthcare

    Fildena 25 Mg is used by men suffering from ED. The drug provides proper blood flow through the nerves. Fildena 25 Mg is manufactured Fortune Healthcare. Fildena 25 mg medicine has a key ingredient known as Sildenafil citrate.


Leave a Comment Here

%d bloggers like this: