How double entry system Works?

The double entry system is an accounting method where every financial transaction affects at least two accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced. For each transaction, one account is debited and another is credited for the same amount, reflecting the dual impact of the transaction. This system helps maintain accuracy and provides a comprehensive view of a company's financial position, making it easier to detect errors and fraud. Ultimately, it enhances financial reporting and decision-making by providing a complete record of all transactions.