double entry

Definition

The foundational accounting system where every transaction affects at least two accounts, ensuring the books always balance through equal and opposite entries. It's the yin and yang of accounting, except with more debits.

Example Usage

Thanks to double entry bookkeeping, we can trace how a simple purchase affects both cash and inventory accounts simultaneously.

Origin

Developed by Italian mathematician Luca Pacioli in 1494, documented in 'Summa de arithmetica'

Fun Fact

Double-entry bookkeeping is considered one of the greatest business innovations ever—Goethe called it 'one of the finest discoveries of the human intellect,' which seems excessive but accountants take what they can get.

Source: Fundamental accounting principles

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basis point

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Advanced

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💰 Finance / Accounting

Intermediate

debit

An accounting entry that increases assets or decreases liabilities in the left column of the ledger, or in normal-person terms, money leaving your bank account. It's the financial industry's fancy word for "subtraction" that confuses everyone because in banking, a debit increases your account from the bank's perspective but decreases it from yours. The reason accountants have job security is explaining why debits aren't always subtractions.

💰 Finance / Accounting

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