Business and finance
Double entry bookkeeping: frequently asked questions
Double entry bookkeeping is the method in which every transaction is recorded twice, once as a debit in one account and once as a credit in another, so the two sides of the books always balance. When they do not balance, you know there is an error to find. It is the basis of almost all bookkeeping.
How double entry works
Every transaction is recorded twice, once as a debit in one account and once as a credit in another. Because both entries are for the same amount, the two sides of the books always balance. When they do not balance, you know there is an error to find.
Where the entries go
Double entry runs through every part of a set of books. The table shows where the entries are made, from the sales and purchase ledgers to the control accounts.
| Bookkeeping job | What it involves |
|---|---|
| Sales and purchase ledgers | Recording invoices and credit notes, and tracking who owes what |
| Cash book and bank reconciliation | Recording money in and out, then matching it to the bank statement |
| VAT | Recording VAT on each transaction and preparing the figures for the return |
| Control accounts and trial balance | Checking the ledgers agree and the books balance before the accountant takes over |
The trial balance
The trial balance is the check that the ledgers agree and the books balance before the accountant takes over. Once you can post a month of transactions, reconcile the bank and extract a trial balance, you can keep the books for most small businesses.
Learning double entry from scratch
The Level 2 Bookkeeping Course starts with what a bookkeeper does and the accounting equation, and every method is taught with worked examples first. There are no formal entry requirements for this bookkeeping course online; you need to be 16 or over.
Double entry for your own business books
Bookkeeping Basics is an accredited CPD short course of 6 modules that takes about 6 hours, paid once.