Double-entry bookkeeping is the foundation of modern accounting. Every transaction affects at least two accounts - one debited and one credited - so the books always balance.
What it means
The logic is that every value has two sides: where it came from and where it went. Pay an employee, and cash decreases (a credit) while a salary expense increases (a debit). Because each entry has equal debits and credits, the sum of all debits in the system always equals the sum of all credits, which is what makes errors detectable.
Where it fits in
Double entry underlies everything downstream - the journal records the two sides of each transaction, the ledger sorts them by account, and the trial balance proves debits equal credits. A payroll journal is just double entry applied to a pay run.
Key rules
- Every transaction hits at least two accounts.
- Total debits always equal total credits.
- Built on the idea that value has a source and a destination.
- Makes many errors detectable because the books must balance.
