Double Entry System and Its Features | दोहोरो लेखा प्रणाली र यसका विशेषताहरु

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double entry system

Double Entry System Concept

  • If each and every financial activity is recorded by using the rule of debit and credit then such modern, systematic, scientific and fundamental concept of accounting is called double entry system.
  • It has a two-fold effect on the accounting process.
  • The double entry system is a modern system of bookkeeping based on duality principle propounded by Luca De Pacioli on 1494 A.D. from his book “Summa de Arithmetica” on “Accounting of Venice” chapter.
  • The double entry system is a fundamental and scientific system. (fundamental + scientific)
  • Double entry system prevents accounting frauds errors.

Double Entry System Equation

Assets = Equity +Liabilities

double-entry-accounting

Features of Double Entry System

  1. It has a double effect of every financial transaction
  2. Equal effect on both sides
  3. A complete, scientific and reliable method of accounting
  4. Helpful to prevent frauds and errors
  5. Flexible for the correction in the process
  6. Useful for internal control system
  7. Concept of debit the receiver, credit the giver.
  8. It keeps the full recording of economic transactions
  9. Helpful to make final accounts
  10. Easy to analyze and help to make comparable financial statements
  11. Complex to understand, time-consuming, expensive and not suitable for small organizations
  12. A universally accepted rule of accounting

Principles of Double Entry System

  1. Principle of debit and credit
  2. Principle of two-fold effects
  3. Principle of equality
  4. Principle of preliminary entry
  5. Principle of accounting posting

Double Entry System in Nepal

In B .S.1993, Biratnagar Jut Mill used the double entry system for the first time in the private sector in Nepal.