Double-entry Accounting Meaning and Definition

Pronunciation

/ˈdʌbəl ɛntri əˈkɔntɪŋ/ 🔊

Part of Speech

Noun

Definition

A systematic method of recording and classifying financial transactions, where each transaction is recorded twice, once as a debit and once as a credit, to ensure accuracy and transparency in financial statements.

Examples

• The company implemented double-entry accounting to streamline its financial reporting.
• Double-entry accounting allowed the accountant to identify errors in the previous year’s financial statements.

Synonyms

• Accounting
• Bookkeeping

Etymology

Double-entry accounting originated in Italy in the 14th century, and was developed by Luca Pacioli in his book “Summa de arithmetica, geometria, proportioni et proportionalità” (Summary of Arithmetic, Geometry, Proportion, and Proportionality).

Usage Notes

Double-entry accounting is widely used in business and finance to ensure accurate and transparent financial reporting. It is particularly important in large organizations and financial institutions.

Cultural References

In popular culture, double-entry accounting is often referenced in business and finance contexts, such as in TV shows and movies that depict financial transactions and financial analysis.

Idiomatic Expressions or Phrases

“In the black” refers to a company’s financial situation being profitable, while “in the red” refers to a company’s financial situation being unprofitable.

Related Words or Phrases

Accounting, Bookkeeping, Financial Reporting, Financial Statements

Collocations

Double-entry accounting is often used in conjunction with financial statements, such as balance sheets and income statements.

Frequency of Use

Double-entry accounting is a widely used and well-established method of financial bookkeeping, and is used by companies and organizations of all sizes.

Common Misspellings

DOBPLE-ENTRY ACCOUNTING, DOUBBLE-ENTRY ACCOUNTING