From the course: QuickBooks Pro 2021 Essential Training

The double-entry system of accounting - QuickBooks Pro Tutorial

From the course: QuickBooks Pro 2021 Essential Training

Start my 1-month free trial

The double-entry system of accounting

“

- [Instructor] QuickBooks uses what's called a Double Entry Accounting System. This is a formal system that's a world wide standard for accounting. What a double entry system means is that every single transaction or every record in QuickBooks has a least two records that are going on behind the scenes. There are two transactions. A debit and a credit. And they have to add up to the same amount. Most of the time you don't see this happening. For example, when I create an invoice and I'm going to show you how to do this later. You're sending it out to a customer. And an account of yours will get debited. That account is the accounts receivable account. It's the account that's waiting for this money that's going to be in the Balance Due field. When your customer pays you, that payment gets credited from your accounts receivable. And it's being debited in to your company's checking account. Which is where the money is arriving. So, if you find your self creating accounts for everything, now you'll know why. It's because every single transaction needs this double system to tell it where to go and where it's coming from. In fact, different types of accounts will handle debits and credits differently. In some accounts a credit means the account is decreasing in value. And in others it means the account is increasing. Where is the money be credited? Where is it being debited? It will make a lot more sense as we keep going. But I did want you to know why we seemingly create an account for everything in QuickBooks.

Contents