Why Is Double-Entry Accounting Important?

It facilitates understanding of the relationship between assets (resources) and liabilities/shareholders’ equity (funding) of a company. The income statement, the balance sheet, and the statement of cash flows are connected; the relationship among these three statements and their impact on one another can often be initially illustrated through debits and credits.

Get Crash Course in Accounting and Financial Statement Analysis, Second Edition now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.