A double-entry system is a system of bookkeeping that records the two-fold effect of any financial transaction. This is a system of recording the effect of a transaction in two different aspects. In other words, a double-entry system is a technique of recording a transaction in the ‘Debit Side’ of one account and ‘Credit Side’ of another account. This system helps in finding accurate and actual profit & loss as well as the financial position of a business. This system does not ignore or neglect any aspect of a transaction. That’s why, the double-entry system is regarded as a modern, complete, scientific and comprehensive system of accounting.

In the 15^th century, French scholar Lucas Pacioli described the double-entry system as a method of arranging accounts in such a way that the dual aspect would be expressed by a debit amount and an equal and offsetting credit amount. This concept marked the modernization of accounting overcoming the limitations of the single entry system. This concept was founded on the fact that every transaction hasthe involvement of two parties with equal impact on two accounts. This is the dual aspect of accounting on which the entire concept of double-entry system is framed upon.

Difference Between Single Entry and Double Entry System

The double entry system is an improvement over the single entry system. It overcomes the limitations and problems of a single entry system. Moreover, the difference between single entry system and double entry system has been presented as below:

Basis of Difference	Single Entry System	Double Entry System
Duality Principle	Record is not maintained using the duality principle	Accounting records are based on dual aspect
Type of Account	Personal account and cash summary only are prepared	All accounts: Personal, Real and Nominal are prepared
Trial Balance	No arithmetical accuracy can be measured due to the absence of trial balance	Arithmetical accuracy can be checked by preparing a trial balance
Net Profit	Due to incomplete record, only the estimate of net profit is calculated	Actual net profit is calculated by preparing the Income Statement
Financial Position	Financial position cannot be judged as Balance Sheet cannot be prepared	True financial position can be judged by preparing Balance Sheet
Acceptability	It is not accepted by all parties as a system of recording transaction	It is widely accepted as a scientific method of recording financial transactions
Suitability	It is suitable for small businesses only	It is suitable for every kind of business firm
Tax Evasion	The chance of tax evasion or avoidance is more	The chance of tax evasion or avoidance is  less

Characteristics of Double Entry System

Being a modern and scientific accounting system, it has different and distinct characteristics. The major characteristics of the double-entry system have been presented as under:

• Double Effect:

The foremost characteristic of a double-entry system is the double effect of the transaction.Every business transaction has double effect. It affects the debit side and credit side both at a time.

• Equal Effect:

Every transaction effect the debit side and credit side. But what is more important is that the effect on both these sides is by the same amount. Precisely, same amount is recorded in both the debit and credit sides of a transaction.

• Adverse Effect:

Under the double-entry system, there is a double effect of every transaction ie. One on the debit side and one on the credit side. But this does not mean double recording on the debit side only or credit side only. This means every debit has an adverse credit effect and vice versa.

• Scientific System:

Double entry system has its own rules, regulations, values, norms and principles. No transactions are recorded haphazardly. All transactions are recorded within the framework of the system and principle. Hence, it is a scientific system.

• Arithmetical Check:

This system checks the arithmetical accuracy of the accounting. The total of the debit side must match the total of the credit side. If the debit and credit side total is not equal, this means an arithmetical error has occurred.