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
In most cases it’s not going to be a line immediately underneath it.
Let’s argue I pay rent, I haven’t done this before so my rent account has $0. I have $5000 in cash and rent is $1000 I’m going to Credit my Cash account and debit my Rent account. I write in my Cash account, rent |credit $1000| balance $4000. I then write in my Rent account, Rent paid with cash| debit: $1000 | balance $1000. I now know where my cash went by looking at my cash account AND I know how much I paid with rent without searching through all of the cash account without having to search my cash account.
This is really important for larger businesses who might have multiple rent payment due every month. It’s also far easier to track where things are coming and going. Also makes it easier when you have to prepare financial statements. How much did we spend on rent? Well we can look at the rent account and we have an answer.
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