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Pooja, Lovely Professional University Unit 2: Double Entry System

Unit 2: Double Entry System Notes

CONTENTS

Objectives
Introduction
2.1 Meaning of Double Entry Accounting System
2.2 Importance of Double Entry System
2.3 Classification of Accounts

2.3.1 Personal Account
2.3.2 Real Account
2.3.3 Nominal Accounts
2.4 Rules of Double Entry Accounting System

2.5 Summary
2.6 Keywords
2.7 Self Assessment
2.8 Review Questions
2.9 Further Readings

Objectives

After studying this unit, you will be able to:
z Explain the meaning of double entry accounting system
z State the importance and rules of double entry accounting system

Introduction

The modern system of book keeping is based on the double entry system. Therefore, we are
discussing this system only. The father of this system is the Lucas Paciolo. He gave the details of
this system in his book “De Compute Set Scripturise” in Italy in 1494 A.D. As per this system every
transaction of the business has double aspects/double effect. Therefore, every transaction must
be recorded at two places or accounts. If in a transaction someone is a giver, some other will be
a receiver.
?

Did u know? This system of accounting is also called Mercantile System or Western System
of Accounting.
This system is so organized, accurate, complete and scientific that it is now adopted universally.

In the words of Keller, M.J. Keller in–Intermediate Accountancy, “The most common system of
accounting data for an enterpriser is the double entry system. As the name implies, the entry
made for each transaction is composed of two parts, a ‘debit’ and a ‘credit’.

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