Bookkeeping for Beginners – How Bookkeeping Works

Bookkeeping works on duel effect basis which are Debits and Credits. The two equal and corresponding effects (recordings) of each transaction are termed Debits and Credits.

A Debit represents an assets and a Credit represents a liability. Debit will increase the value of an assts and Credit will reduce its value. However, Debit can also increase the expenses and reduce the liability, and Credit can give raise to income but is also capable of reducing the asset!

Let us look at a few bookkeeping examples. If you have received your salary tphen the duel effect is that, you have been paid for the work that you have done and you now have more money. If you now go shopping and buy a watch then you will have the watch but unfortunately you will have less money.

Now look at another example: if you have deposited cash in bank then the duel effect this time is that, you are now deprived of the cash that has been deposited. However, at the same time your bank balance has increased.

If you have already got a feel of how booking works, then keep reading various articles on this website. These articles have been written with the view of helping the beginners as well as advance users in such away that the transition from beginners’ level to advance accounting principles is very smooth.

Bookkeeping for beginners may appear little bit confusing at the early stages but in fact it is very simple. Once you learn the three rules of journalizing the financial transactions, understanding Debits and Credits becomes easy.

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