Double-Entry Bookkeeping

Abstract

Firms of all kinds need, in different degrees, to maintain records of their transactions with other firms and persons, of the debts they owe or are owed, and of their assets. The records they keep for this purpose constitute their accounting records. Traditionally they have consisted of account-books of various kinds, but they can take the form also of magnetic tapes and so on. If the records are kept on a systematic basis, one can speak of an accounting system. From the accounting records one can prepare a variety of accounting statements in which the detailed accounting information is rearranged, regrouped and presented in summary form. The balance sheet and the profit-and-loss (or income) account or statement are important examples of such accounting statements.

This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman