Meaning and History of Double Entry System Of Accounting.

Meaning and Definitions of Double Entry System of Accounting.

This system of accounting is based on Dual Aspect Concept. According to this concept, there are two effects of every business transaction, which are on two different accounts on different sides. In any one account effect is recorded on the debit side and in the other account it is recorded on credit side. Thus for every Debit there is a Corresponding Credit. Hence, it is clear that as a transaction is recorded in two accounts it is called 'Double Accounting System.

Now we take a business transaction as example to understand it.

Purchased  a Table (Furniture) in business for cash.

Here we can understand that Table(Furniture) is coming  in the business and Cash is going out. 

As we discussed above. According to  Double Entry System, there are two effects of every business transaction, which are on two different accounts on different sides.

In above example also two Accounts are effected at different side Furniture is coming in therefore Furniture account will be debited  and  cash  is going out therefore Cash account will be credited.

Definitions

In the words of William Pickels, "The two fold effect of every transaction is recorded under double entry system - one part is of the one receiving and the second part is of the one giving, hence in every transaction one account is of the receiver and the other account is of the giver. The account of the receiver is debited and the account of the giver is credited."

Brief History of Double Entry System.

Experts of accounting believe that this system of accounting was discovered in 15th century. A monk resident of Venice, Lucas Pacioli is regarded as the father of this system. He 1494 he wrote a book in Italian named, 'De Computiset Scripturis, on double accounting system. This system was adopted by merchants of Italy and was called 'Italian System'. Later on this system was adopted in England and in 1543 'Houghold Castle' translated this book in English and it was printed in England. From then onwards English merchants have also started using it. Since then there have been many changes in this system. In the year 1795 an Englishmen Edward Jones published a book English System of Book-Keeping' with many amendments, where he introduced the use of Subsidiary Books, Trial Balance etc. Due to universal principles this system is widely used.

In brief, Double Entry System is most scientific method of recording business transactions. All business houses use this system. This system opens all types of accounts like personal, real and nominal. For every transaction there are two accounts involved, one account which receives some benefit is debited and the other account which gives benefit is credited. This system is also called as Mercantile System