• every financial transaction gives rise to two accounting entries,one a debit and the other a credit. The total value of debit entries in the nominal ledger is always equal at any time to the total value of credit entries.
• which account receives the credit entry and which receives the debit depend on the nature of the transactions

Salient points on nature of transactions which affects the double entry bookkeeping:

1. An INCREASE in an EXPENSE ( re: purchase of petrol) or an INCREASE in an ASSET ( re: purchase of plant & machinery) is a DEBIT
2. An INCREASE in REVENUE ( like a sale) or an INCREASE in a LIABILITY (re: buying goods on credit) is a CREDIT
3. A DECREASE in an ASSET ( re: using cash to pay items) is a CREDIT
4. A DECREASE in a LIABILITY ( re:paying a creditor) is a DEBIT