I must be misunderstanding something when trying to research this topic because I genuinely do not understand to point of DE bookkeeping?
To me, DE shows the exact same information that single entry bookkeeping does. In single entry you have Debit (an expense) or Credit (an income) and for each purchase or income you write a single line with how much money is involved, and that number gets added or subtracted from the balance.
But from what I can tell, in DE bookkeeping, you write the exact same thing, but then you have a second line with the exact same amount in the other column. So for example if you make a purchase of $500 for books, in one line you write “Books | Debit: $500 | Balance: $XXXX” and then in a line immediately underneath it you write “Books | Credit: $500 | Balance: $XXXX” which all can be summarized in single-entry by saying “Books | -$500 | Balance: $XXXX”?
So other than maybe proof reading by “balancing the books” to make sure both columns add up to the same amount, I can’t or don’t understand if there’s any actual difference? Can anyone help?
In: Economics
So, the key point is that the two entries are supposed to be in *different logbooks*. Everything that leaves your account then arrives at some other account, and that accounts entry points back to your account as the origin of that money.
thus, if you and me both have copies of the transaction, I can’t just “add a zero” to the incoming transaction to magic some extra money into my account (IE, say i got $5000 for those books), because they can check your records, which I dont have access to to edit, and show a different amount ($500), and then i’d be having to explain how what i was doing was not fraud (and likely failing).
does that make sense?
Latest Answers