The Double-Entry Systems’ Innovations and Limitations
Double-entry systems make it possible to balance the books. Double-entry systems have two columns which display the debits and credits. The total amount can be viewed by subtracting and adding. The two-column method allows for a running total and an update to the total sum.
Double-entry systems allow for easier determination of past-due accounts. An accountant can determine if there is an error in the transaction or if an account has become overdue. This can be done by comparing the totals of the debit and credit columns, if they are regularly run in manageable blocks (in absence of electronic records).
Individuals, organizations, and governments can all maintain double-entry systems. Through our bank accounts, each of us can access a double entry system. If someone claims that we didn’t repay them, they can use a debit to establish, for example, that a check was sent on a certain date and paid in a particular amount.
However, double-entry systems can be manipulated or “cooked,” as we have seen with corporate scandals (like…