Definitions [3]
“Every business transaction has a twofold effect in that it affects two accounts in opposite directions and if a complete record is to be made of each such transaction, it would be necessary to debit one account and credit another account. It is this recording of the twofold effect of every transaction that has given rise to the term Double Entry.”– J.R. Batliboi.
An account is a summarized record of transactions affecting one person, one kind of property or one class of gain or loss.” – G.R. Batliboi
“An account is a ledger record in a summarized form of all the transactions that have taken place with the particular person or thing specified.” –Carter
The Accounting Equation shows that everything a business owns (Assets) is funded by either money borrowed from outsiders (Liabilities) or money invested by the owner (Capital).
Formulae [1]
Assets = Capital + Liabilities
