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Double Entry Bookkeeping System
The
double-entry bookkeeping system began in the 13th century and
refers to a set of rules to record financial information in a
financial accounting system wherein every transaction or event
impacts at least two different accounts.[1] In modern accounting
this is done using debits and credits within the accounting
equation, assets = liabilities + equity. The accounting equation
serves as a kind of error-detection system: if, at any point, the
sum of debits does not equal the corresponding sum of credits, then
an error has occurred.
Since there are several different types of errors that can occur which result in equal sums for debits and credits, double-entry accounting is not a guarantee that no errors exist. However, it is still useful.
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