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Double Entry Bookkeeping /Accounting – 13th Century Practice Still Relevant in 21st Century

February 16, 2010

BankerAccording to some sources, the Double Entry Bookkeeping and Accounting system may have had its earliest primitive origins credited to the ancient Romans and the ancient Islamic empire.  However, the modern double entry bookkeeping/accounting system is credited to Giovanni di Bicci de’ Medici, an Italian Banker in Florence in the 13th century.  He was loyal to the Papacy and was rewarded for that loyalty allowing him to really grow his banking empire.

So put simply, in the double entry system there are two entries made for every transaction – a debit and a credit.  The debit is on the left and the credit is on the right.

In this system, you start with a cash balance.  Once you add all the debits and subtract all the credits, you should have the same cash balance.  It is a great way to double check for errors.

The more transactions the double entry system allows a business person to know where the money is coming from and going to which is a foundation of building a profitable enterprise.

Your accountant, tax services firm or tax expert can assist you with more questions on how this system works.

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