Double-Entry Accounting

An accounting system that records every transaction as both a credit and a debit. Therefore, all credits and debits must equal, resulting in a zero balance. Based on the principle of duality—that every economic transaction has both a source and use, its main benefit is that it helps to catch errors in recording transactions or to find them. Because credits and debits are simply a means of maintaining a zero balance (if there are no errors), a credit or debit is neither good nor bad in itself, and what is a credit and what is a debit in accounting will often differ from what people would intuitively think should be a credit or debit.

The idea of double-entry accounting first appeared in a mathematics book by Fra Luca Pacioli in 1494.

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