What is the advantage of recording every transaction twice in two separate accounts instead just recording it once?
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Think about it like this. You want to record the money going someplace, but also where it went.
If I’m balancing a checkbook, its fine to say ‘-100’. But I really have no easy way to know what I spend that on, if i want to check down the road.
So instead, I would say:
Cash -100
Utility Expense +100
I can always see what the account balance is, by checking cash. But if I want to know what I spend on utilities in the last year, or 10 years, I can pull that information in less than 5 minutes. A business large business might have 1000 general ledger accounts. There would be multiple managers, each with their own budgets, so this allows the accountants to see how much each manager has spent, how much they have left, or to see if certain operations are profitable.
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