Double-entry bookkeeping

The Underlying Accounting Model (Conceptual Outline)

1. Double-entry bookkeeping is the fundamental law Every transaction must be recorded with equal debits and credits. This rule is invariant and non-negotiable.
2. Account classification defines the coordinate system Accounts are categorized into Assets, Liabilities, Equity, Revenue, and Expenses. This classification provides the structural framework for interpretation and reporting.
3. Normal balance defines axis direction Each account type has a predefined normal balance (debit or credit), which determines how increases and decreases are represented.
4. Account codes represent points in the system Each account code is a concrete instance within the classification framework, uniquely identifying where transactions are posted.
5. Journals describe movement through the system Journal entries record how transactions move values between accounts, while always obeying the rules of the double-entry system.

Normal Balance :

Account Type	Increases With	Decreases With	Normal Balance
Assets	Debit	Credit	Debit
Expenses	Debit	Credit	Debit
Liabilities	Credit	Debit	Credit
Equity	Credit	Debit	Credit
Revenue	Credit	Debit	Credit