The Double-entry bookkeeping is a Buchführung system where every business transaction affects at least two accounts and is recorded with an equal amount in debit and credit.
Doppelte Buchführung ist ein Buchhaltungssystem, bei dem jede Transaktion auf mindestens zwei Konten erfasst wird, einmal als Soll- und einmal als Habenbuchung.
In double-entry Bookkeeping, a business transaction is not recorded in just one place. Every entry has a corresponding counter-entry in at least one other account.
This keeps debit and credit entries balanced in terms of amount, and economic transactions can be systematically recorded across different accounts.
How does the basic principle work?
For every business transaction, it is determined which accounts are affected and on which side of the account the respective amounts are posted.
The technical allocation to the accounts is as Account assignment designated. The specific debit-credit assignment is subsequently carried out in a Booking entry depicted.
Basic principle: Every debit entry has a corresponding credit entry of the same amount.
Which elements are part of double Bookkeeping?
The fundamental elements include, in particular:
- Debit and Credit
- Content
- Account assignment
- Booking entries
- Content balances
The individual entries are recorded in the respective accounts and, among other things, in the Ledger systematically combined.
Connection with Balance sheet and profit and loss statement
The double Bookkeeping forms an essential basis for determining assets, liabilities, expenses and income items.
The resulting account balances are fed into, amongst other things, Balance sheet and profit and loss statement.
Double Bookkeeping and CASH-BASIS INCOME STATEMENT – what is the difference?
The double Bookkeeping is from the Cash-basis income statement (CASH-BASIS INCOME STATEMENT) to distinguish.
Under the double Bookkeeping method, business transactions are systematically recorded in debit and credit accounts. Under the CASH-BASIS INCOME STATEMENT method, taxable profit is generally determined by offsetting operating income against operating expenses.
