Lesson 1 of 8 · 3 min

Double entry, in plain words

Every amount comes from somewhere and goes somewhere: Ledger writes down both sides, and they always match.

  1. Every amount comes from somewhere and goes somewhere. When you sell atta on credit, the customer owes you more, and you've earned it. Double entry writes down both sides: one side is the debit, the other the credit, and the two always add up to the same.

  2. What the invoice posted

    Here's the sale to Bismillah Kiryana as Ledger writes it. What the customer owes and what the atta cost you go on the debit side; the sale and the stock that left go on the credit side. Debits equal credits, to the paisa.

  3. What the payment posted

    Then they pay cash. Your cash goes up (a debit) and what they owe comes down (a credit). The sale isn't counted again: the money just moved from what they owed to your drawer.
  4. You'll rarely write one yourself: every invoice, bill, payment and expense makes its own. Ledger checks that each one balances before it's written, which is why your books always add up. Reports → Trial balance lists every account's debit or credit on a day, and says it plainly: debits equal credits.

Try it

Opens Ledger. You'll be asked to sign in first; new businesses get a free week, no card needed.

See the trial balance

Quick check

2 quick questions. Pick an answer and Leo will tell you how you did.

1. What's always true of an entry in Ledger?
2. A customer pays an invoice. Does your sales figure go up again?

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