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Double entry system is the main point of accounting

With the change in the nature of trade and trade in the present world, new scientific methods have been introduced in the changing of the ancient method of accounting. This method is generally referred to as the Double entry system. In 1994, an Italian scholar named Luca Passioli first discovered the new rules for writing the transaction according to the double entry method.

double entry system

Definition of Double entry system:

By the method of accounting, transaction of the entity or party of each transaction is debited and the equivalent is credited to the other as the double entry system.

For example, 20,000 rupees was purchased in the machinery. Here two accounts have been affected, namely the calculation of machinery calculation and cash. On the one hand, the businessman is getting the opportunity to enjoy the future of the future through the acquisition of the property and the cash is going down on the other. Therefore, the dealer in this transaction is a debit and cash currency credit.

The definition given by various accounting in the double entry method is as follows:

According to J. L. Hanson, “The system in based in the principle of duality which means that every economic event has two aspect-effort and reward, sacrifice and benefit, source and use that offset or balance each other.

According to A Stephen, “Double entry book keeping is a system by which every debit entry in balanced by an equal credit entry.”

According to Prof. William Pickles, “Double entry system seeks to record every transaction in money or money’s worth in its double aspect the receipts of a benefit by one account and the surrender of a like benefit by another account the former entry being in the debit of the account receiving and later to the credit of the account surrendering.”

In the above discussion, it  said that in the manner in which a person or organization of transactions dealing with debit credits analyzed in scientific method, it is called double entry system.

Origin and Development of Double Entry System:-

The process of accounting is to debit the dual entity or party on each transaction and equivalent of being credited to the other is called the double entry System.

It is a scientific and universal system. Through the Double Entry System, the purpose of bookkeeping of business organizations in met.

Below is the history of origin and evolution of the double entry system:-

Various opinions and debates have created about the origin of dual written met holds. The accounting system have used since ancient times, which is evidence by the current accounting activities. However, the scientific and modern method of accounting means that the use of the double entry system starts in the fifteenth century. At that time, there was a marked improvement in the business of ITALY. In order to improve business trade, numerous transactions are created. And this method arises for such order to be written in a systematic manner. In 1494, a scholar named Luca Passioli in Venice, Italy, explains the basic principles of the Double Entry System in his Summa De Arithmetica Geometrica Proportionet Proportionalita. Successful principles have been defined in this formula, and later it has been changed very little. The birthplace of this method and Luca Pacioli is the father of modern accounting system based on Passioli’s written book. At that time, Italy was the world’s premier trading center. Through the traders, it spreads from different countries of the world to Italy. The book of Passion  translated into various languages ​​and its circulation spreads throughout the earth. In the nineteenth century, there was an industrial revolution in England. As a result, there was considerable change in production and distribution system. This change brings changes in the accounting system. Then the dual writing system used to be used in new designs. In the twentieth century the accounting system got more maturity. Competition started in business world as the origin of joint capital business. As a result, accounting of production expenditure was born. When there is a lot of crisis in industrialization and business handling, there is a serious burden on the accounting system. Before progress, people used the double entry system as the only perfect and complete accounting method for managing their business fairly. The tools that helped enough to originate and develop and expand the double entry system are:

(1)industrial revolution (2) The emergence of collective capital trade and (3) the origin of commercial and corporate law

After the above discussion, it can said that the double entry system gradually improved and now it has become a very popular accounting system. So, in modern times, it is not possible to book a scientific account without this method.

Principles or features of double entry system:-

Double entry system

Double entry system is the most reliable scientific, complete and complete accounting method of accounting. According to Professor William Poles, “Every transaction that is finance or financed in the double entry system is disclosed in dual interest.  As a result debit for the benefit of the accounting sector and credit for the benefit given to the other accounting sector.

In the light of the above definition, the basic principles of the double entry system are discussed below:

(1) Two Parties

(2) Giver and receiver

(3) Corresponding equal amount of money

(4) Debit and Credit

(5) Separate entry

(6) Complete Accounting

(7) Effects

(8) Reliable

In view of the above characteristics, it said that the double entry system is a science-based method.

Advantages of double entry system: –

The double entry system is a scientific, complete and reliable accounting system. In this method, any person or organization enjoys various benefits. Below are the features of the Double Entry System: –

(1)  Maintaining complete account

(2) Verifying arithmetical accuracy

(3) Determination of profit and loss

(4)  Determination of financial position

(5) Detection of errors

(6) Prevention of errors

(7) Comparative analysis

(8) Measurement of efficiency

(9) Communication Information

(10) Cost Control

(11) Fixation of price of good

(12) Determination of Income tax and VAT

(13) Knowing debts and dues

(14) Determination and control over the assets

(15) Easy application

(16) Universal accepted methods

It said from above discussion that if the accounting system used for accounting purposes, then application of this method are observed in both small and medium institutions.

Limitations or disadvantages of double entry system:-

Although the double entry system recognized as a science-conscious, full-fledged, accounting system, there are some limitations or difficulties in this approach. Below are the difficulties discussed: –

(1) Time and expensive

(2) Required expertise

(3) Complexity of accounting method

(4) Limited fields of application

(5) Problems of Secrecy

(6) Probability of errors

(7) Expansion of size of book

In view of the above discussion, it can say that although the double entry system has some difficulties, it is still the best and universally recognized method of accounting in the world.

“Double entry system of bookkeeping is a complete and scientific method”

Double entry system

(1) Journalizing

(2) Ledger posting

(3) Preparation of trial Balance

(4) Preparation of Financial Statements

Therefore, the above discussion can said that keeping the accounts through the double entry system, the real purpose of keeping the account fulfilled and the account statement of this system is acceptable to all. For this reason, the double entry system is a complete and scientific account

 

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