Q7Managerial Economics & Financial Accounting

The Double Entry Accounting System is the standard system used globally. Its core principle is that every single financial transaction has a dual effect on the business.

For every transaction, at least two accounts are affected: one account receives a Debit (Dr.) and another account receives a corresponding and equal Credit (Cr.). This ensures that the fundamental accounting equation ($Assets=Liabilities+Equity$) always remains perfectly balanced.