What is Double-entry Bookkeeping?

When I checked my bills weeks ago, I found I spent so much money last month that I would not afford to pay the fourth quarter rent. 😢 I have to do something to control my expenses this month or I’ll have to sleep on the street in two month. 😂

What I need to do is accounting. It sounds easy but hard to persist. I have tried to accounting many times, and as you can see, I’m still struggling with my bill now. After these failures, I’ve summed up a few tips:

Be lazy: DO NOT take notes of expenses every day manually, use program to import automatically
Review regularly: a bookkeeping without reviews is NOTHING, try to review every month
Classify well: try to use MECE principle (I watched a video about classification is good and I will write a post about it next time.)

From single-entry to double-entry

Let’s go back to our topic: bookkeeping.

History of bookkeeping

In late 13th century, nautical trade was well developed in Europe and the single-entry cannot suit the gradually complicated trade with many rounds of transaction and risk of bad weather. [^1] The modern double-entry system in Europe come form Amatino Manucci, a Florentine merchant at that time. In 1494, Luca Pacioli, a Franciscan friar, first codified the system in his mathematics textbook Summa de arithmetica, geometria, proportioni et proportionalità. After that, the double-entry bookkeeping system was accepted widely in Europe and influenced the development of capitalism. [^2]

Limitation of single-entry bookkeeping

The word “Double-entry” sounds abstract. Now let’s take an example of bookkeeping. And we will fine the benefit of the double-entry and the limitation of single-entry bookkeeping.