Double entry system in class 11

Double entry system in class 11
Intro
Accounting System
The system designed to record the accounting transaction and events of a business and
account for them in that complies with its policies and procedures is called accounting
system.
"Accounting system is a means of collecting summarising, analysing and reporting in
monetory terms the information of Business R.N. Anthony."
Types of Accounting System
There are three methods of accounting :
Single Entry System
Indian Accounting System
Double Entry System
Accounting System
Single Entry System
Indian Accounting System
Double Entry System
1 Single Entry System
Single Entry System is a book - keeping system that only records one aspect of each
transaction , i.e. a debit or a credit .
In fact, a single accounting system is the system of bookkeeping or accounting in which
cash and personal accounts are kept regularly. Accounts of debtors and creditors come
under personal account. Obviously, in this system real accounts or property accounts and
non-real or nominal accounts are not prepared.
It may be noted that under this system both aspects of some transactions are accounted
for, while in others only one side is accounted for or not at all. Therefore, the accounts kept
under this system are said to be incomplete, unordered, unclear and unreliable.
Nevertheless, this system is used in small business firms because this system is very simple
and flexible.
2. Indian Accounting System
When the accounting of transactions is done on the basis of certain principles in the books
and according to tradition in any Indian language or regional language or Mudia language,
then it is called 'Indian Accounting System'.
Due to this system being prevalent in the Indian language and in India, it is known as
Indian accounting system. Since the common people in India call the traders by the name of

Mahajan. Therefore, the method adopted by these traders is also called 'Mahajani System of
Book-keeping', usually written and prepared by the bookkeeper of this firm, hence it is also
called as Accounting System. is called. This method has been described in the
'Arthashastra' of Kautilya's ancient text of India 400 years before Christ. Although deals
under this system are written in Hindi, Urdu, Gujarati, Marathi, Bangla, Oriya or any other
Indian language, but in this system the use of 'Mudiya' language is mostly used.
In this system, long books are used for accounting.
At the end of the accounting year, profit and loss account and balance sheet are prepared.
This system is also similar to the double accounting system.
3. Double entry system
The history of the dual system of accounting is more than five hundred years old, although
bookkeeping is being used in the world since ancient times. Fra Lucas Pacioli of Italy is
considered the father of modern bookkeeping (or accounting). In 1494, a book of his was
published under the name "Summa De Arithmetica Geometrica Proportioni at Preportiona
lita" in which there was a chapter called De Computiset Scripturis. In this chapter Pacioli laid
down both the aspects of each transaction according to the rules. The method of writing was
explained. Later it was translated into English and other languages

and it came to be called
double accounting method because in this method each transaction is divided into two parts
Debit and Credit. It is to be noted that this book gave the form of science and art to
bookkeeping.Before its publication the double accounting system was in scattered form.
we will discuss the double accounting system in detail.
Meaning of Double entry system
Double accounting system is the most important and popular system of book-keeping or
financial accounting. This system is basically based on the principle that every transaction
has two forms or aspects. For example, one, the beneficiary and the other, the beneficiary or
one, the taker and the other, the giver. Similarly, when one thing comes, another thing goes
in return. Therefore, both the aspects of a transaction or transaction should be accounted for
but it should not be taken to mean that each transaction is written twice. In fact, under this
system, one side of every transaction is credited (Debit) and the other side is credited.
The system of accounting in which both the forms or aspects of each transaction are
recorded in place is called double accounting system.

Stanley W. Roland rightly wrote that "the double accounting system, which is believed to
have originated in the 15th century, is the system of recording each transaction in both
forms. In short, it means that every debit and every credit is debited.'
Defination of Double entry system
Double accounting system is also called 'double-notation system' or 'double-entry
system'.
1. In Double Entry System every transaction comprises two aspects , the one aspect is
receiver and the other is giver , the account of the receiver is debited and that of the giver is
credited . " -William Pickles
2.. Spicer and Pegler state that "The dual accounting system of book-keeping is a system of
recording transactions assuming that there are two forms of each transaction - the payee
and the payee". The account which fetches the value is debited and the account which gives
the value is credited."
Proper Definition - "Double Accounting System" means that system of accounting in which
one of the two aspects of each transaction is debited (Debit or Dr.) and the other is credited
(Credit or Cr.) on certain rules. on the basis of that."
explanation by example
1. ₹ 1,500 was received from Abhay. In this deal Abhay is going to give Rs. There are two
aspects to this - (i) the cash (cash) coming, and (ii) the unfavorable giver. Therefore their
accounts will be made in cash account and Abhay's account. As per rules, Cash will be
debited (Dr.) and Abhay will be credited (Cr.). (The rule is explained further.
2. Gave ₹ 100 to Shailesh. In this transaction, Shailesh receives Rs. While Rs. is given to
Shailesh. Hence, the two sides are as follows- (i) cash going, and (ii) cash received by
Shailesh. Therefore their accounts will be made in cash account and Shailesh's account. As
per rules, Shailesh will be debited (Dr.) and cash will be credited (Cr.).
Why is it Called Double entry system
After studying the meaning and definitions of Double Accounting System, it is easy to
explain why it is called 'Double Accounting System'? It is called double accounting system
because of the following reasons.
(1) The effect of every transaction falls on two accounts - in each transaction one is the
giver and the other is the receiver. It is impossible to be a giver without a giver and a giver
without a taker, as if Ram sold goods worth ₹ 500 to Shyam on credit, then Ram is the giver

and Shyam is the taker. Both the parties shall record the transaction in their respective
books. Therefore, two accounts in Ram's books - Shyam's account and purchase account
will be affected. Similarly in Shyam's books also two accounts - Ram's account and sales
account will be affected.
(2) There are two sides to every account - According to the double accounting system,
“every account has two sides. One is called the debtor side or debit side or debit side and
the other is called deposit side or integration side or credit side.
(3) Each transaction is accounted for at two places in the books of a trader on the opposite
side - according to the double accounting system, each transaction is accounted for in the
debit side of one account related to it, and the credit side of the other account (Debit side).
Credit side). In the above example, in the books of Ram, Shyam's account will be on the
debit side/accounts/debtor (Dr.) side and the sales account will be credited (Cr.) side.
Similarly, in the books of Shyam, the account of this transaction will be in the debtor side of
the purchase account and on the credit side of Ram's account. Therefore, if the account of
the transaction is in the debtor side of the first account related to it, then it will be in the credit
side of the second account related to it. That is why it is called double accounting system of
bookkeeping.
Features or Characteristics of Double Entry System
The following are the characteristics of double accounting system
1. System to be fair - Dual accounting system is fair, because in this both the forms of all
transactions or transactions are accounted for. One account is debited and the other
account is credited.
2. Accounts according to the rules - In the double accounting system, the accounts of all the
transactions are done according to a certain rule. In other words, one side of the transaction
is debited and the other side is credited. There are definite rules for debit and credit
3. Accounting of personal and impersonal aspects- Both the parties to a transaction may be
personal or one party may be personal and the other side may be impersonal or both the
parties may be impersonal. In double accounting system, both personal and impersonal
parties are accounted for. Hence Carter says, "Dual accounting system refers to the
accounting of both personal and impersonal transactions."
4. Knowledge of Arithmetic Accuracy - Since one side of the transaction is debited and the
other side is credited, the sum of the debit side is equal to the sum of the credit side. This
comparison gives knowledge of arithmetic accuracy. Arithmetic correctness can be checked
by making Trial Balance. In fact, trial balance is a major feature of the single accounting
system.

5. All accounts have two parts - the left side is called the 'debit side' and the right side is
called the 'credit side'.
Advantages of Double entry system
Following are the major advantages of double accounting system:
1. Scientific System - The books kept according to the double accounting system are
considered complete, accurate, authentic and scientific. Since in this the accounts are done
on the basis of certain rules and principles, hence it is called scientific method.
2. Entry of both Aspects - In the double accounting system, both sides of each transaction
are accounted for.
3. Verification of Arithmetical Accuracy - Every transaction is accounted for in two accounts.
Therefore, their correctness can be easily checked by making a trial balance.
4. Little Possibility of Fraud - Due to the account of each transaction in two accounts, the
possibility of forgery and fraud is reduced.
5. Personal and Impersonal - In dual accounting system, both personal and impersonal type
of accounts are done. On the basis of these accounts personal, real and nominal accounts
are opened in which any necessary information can be found, therefore this system of
bookkeeping is considered complete.
6. Preparation of Trading and Profit & Loss Account ( Preparation of Trading and Profit &
Loss Account ) In the double accounting system, making a trading account, gross profit
(Gross Profit) or gross loss (Gross Loss) and net profit (Net) Profit) or Net Loss can be
determined.

7. Knowledge of Financial Position - By making Balance Sheet at the end of the year,
knowledge of the economic condition of the business / organization can be done. It gives
information about the capital, liabilities and assets of the business.
8. Comparative Study - Due to this method, the progress or downfall of the organization can
be easily detected by making a comparative study of profit-loss account, balance sheet,
income-expenditure, etc. of different years.
9. Various Informations - Due to this system, different types of information are easily
available; Like ( i ) how much total money is to be received from the debtors or debtors ? (ii)
What is the total amount to be paid to the moneylender or creditors? ( iii ) What is a closing
stock ? (iv) What was the total amount of purchases and sales in a certain time? And so on .
Many important facts continue to emerge from this information.
10. Rectification of Errors - Any kind of error in the bookkeeping can be easily detected and
corrected.
11. Flexible - This system is flexible. Each trader can maintain accounts as per his
requirement and capacity.
12. Suitability and Popularity This system is very simple and useful, hence it has become
popular in all countries.
Disadvantages of Double entry system
1 This system of accounting is quite complex.
2. If the rules of debit and credit are not followed properly, the accounts become wrong.
3. Many books of account are kept under this system. Hence it is an expensive system.

4. This system is not suitable for small and illiterate traders. Despite the above defects,
double entry system or double accounting system is considered to be the best, scientific and
just system of accounting.
Different stager of Double entry system
The following are the steps in the double accounting system of bookkeeping.
1. Identifying and recording of the transaction in Journal or other subsidiary books.
2. Classifying transaction by posting them to the appropriate accounts .
3. Summarizing -
(a) Closing the Books
(b) Preparation of Trial Balance
(c) Preparation of Final Accounts Financial Statements
Trading and Profit & Loss Account ( Statement of Profit and Loss ) ] ( Statement of Profit
and Loss )
Balance sheet
Principles of Double entry system
Following are the main principles of double accounting system
1. Double Aspect - The double accounting system is based on the 'two-party' concept of
transactions. So each deal affects two accounts. One side is the giver and the other side is
the giver. In this system one party is 'debited' and the other party is 'credited' so for each
debit the same amount is credited to one or more accounts.
2. Rule-Based Principle - The principles of double accounting system are based on 'Rules'.
This is the reason that every transaction of business is debited and credited on the basis of
certain rules. The rules for debiting and crediting are based on the nature of transactions and
accounts. The rules of debit and credit are discussed in the next chapter.

3. Entry in Two or More Accounts - Each transaction is recorded in at least two accounts -
one on the debit side of the account and the other on the credit side of the account. Thus
every business transaction has an impact on at least two accounts.
4. Expressed in Monetary Terms - According to this system, only those transactions or
transactions are recorded which can be expressed in money.
5. Transactions between Business and Others - Another principle of double accounting
system is that all the transactions of business are done with the business firm and others
and not with the owner of the business. with .
6. Accounting Period - Accounting period means the period for which the business prepares
its accounts. In other words, it is the period for which the business prepares necessary
accounts to ascertain its profit, loss and financial position. Internally, accounts can be
prepared quarterly and half-monthly. But accounts should be prepared for 12 months to
know the results and financial position of the business in the true sense. In conclusion, the
accounting period is generally of one year. This period is determined on the basis of the
nature of business or as per the convenience of the owner of the business or as per the
rules of the government.
( Fundamental Principle of Double Entry System )
For every debit , there is corresponding credit.
Books of Accounts under Doudle entry system.
1. ( Primary Book )
1. Books of original entry -
• Journal
・Cash Book and other subsidiary books:

➢ Purchases Book
➢Sales Book
➢Purchases Returns Book
➢Sales Returns Book
➢Bills Receivable Book
➢ Bills Payable Book
➢Journal Proper
2. ( Ledger ).

Double entry system in class 11

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Double entry system in class 11