Every explanation of double entry accounting seems to do the same thing. If I'm trying to understand the double part of double-entry bookkeeping, what exactly does the "double" refer to? What's being "doubled"?
How would you salvage the article to actually explain the "double" part in detail? Could you do it purely from Bob's (or Alice's) perspective?
The 'double' in double entry book-keeping is related only to the book keepers own records/books. It has nothing to do with counter party's record keeping.
If Alice purchases a house worth $100,000 in cash, then 2 (double) accounts will get effected. Her cash account will decrease (Credit) by $100,100 and simultaneously her House equity account (or any other appropriate name such as immovable asset etc) will increase by $100,000 (Debit).
This can be recorded in a 3 column table as
Credit account -- value -- Debit account
Cash -- $100,000 -- House equity
In the above transaction, two accounts were effected. Hence the name double entry. This gives a truer picture of ones assets and liabilities.
Note: 1. Debit and credit dont have much to do with increase decrease.
2. A transaction can be modelled to have affect more than 2 account. For example if Alice were to make the purchase with $80,000 loan, then the book keeping could go like
Credit Lender $80,000
Credit Cash $20,000
Debit House Equity $100,000
For the sake of better understanding, if one is uncomfortable with having one record affecting 3 accounts, one can be more robust and split the loan and the purchase into 2 transactions. After all, taking a loan and purchasing a house are 2 different events(transactions).
Transaction one ->
Credit Lender $80,000
Debit Cash $80,000
Transaction two ->
Credit Cash $100,000
Debit House equity $100,000
Don't forget the depreciation, interest, maintenance, and tax accounts if you want to track those against the real estate cost basis for various purposes. You also need to figure out how to create and map accounts to IRS rules or you could put yourself in a real bind when it comes to figuring out tax liabilities or deductions.
It’s a checksum; by decomposing every transaction into a double of (credit A, debit B) that must sum to zero, you catch random arithmetic errors.
You can think of it as “conservation of value”, so you can’t just create money out of thin air in your payment service (credit), without tying it to some account with a corresponding debit.
This originally was intended to protect against typos; eg write a 10 instead of 100, at the end of the day your ledger needs to balance. In software typos are less likely bit it still provides auditability to prevent a large class of bugs from wiping you out.
Speaking of history, I learned that the word "control" comes from contra rotulus -- roughly "checking against the wheel", which was apparently from an early medieval device for keeping tallies. The second meaning of "domination" came later.
Bob and Alice each have a "money" account and a "books" account. Each money account tracks how much money they have on hand while each books account tracks the total value of their private libraries.
So to be clear, there are 4 accounts. Bob's Money, Bob's Books, Alice's Money, Alice's Books.
Because these two homeless librarians only have money and books, you can add the two balances together for each person to get their net worth.
If Alice owns 3 books worth $120, then the "Alice's Books" account would show a balance of $120. Meanwhile, Bob has 12 books worth $700.
When Alice buys the books, she -credits her bank account $20 and +debits her books account $20 (the value of the new book). Thus her net worth stays the same, but she has more books assets and fewer cash assets.
Similarly Bob -credits his books account $20 and +debits his bank account $20. His net worth also stays the same but he now has more cash than before.
On Alice's way back to the bridge she resides under, it starts to rain. Alice's new book is ruined. She -credit's her books account $20 and her net worth goes down by $20.
And when the book is ruined, she credits her books account (an asset account) $20 and debits her "depreciation/impairment" account (an expense account) $20.
Cash might be an account, and a bank account might be another one. So if Alice buys with cash, it'd be $20 debit in the books account [1] and $20 credit in the cash account. Or if she paid for the book with something that directly takes the money from the bank account, the credit would be to the bank account.
Note that "credit" in double-entry bookkeeping means a transfer from that account and debit means a transfer to that account. So the debit side of buying the book goes into the books account. The credit entry is for whatever account value is transferred from in the transaction.
I'm not sure I'd say that Alice's net worth goes down by $20 when she buys the book since the financial value of the book would technically also be part of her net worth.
I also wouldn't consider "net worth" to be a single account.
Technically net worth would be the sum of all of Alice's assets in cash, bank accounts, real estate, books and other non-financial assets etc., minus all her liabilities. Each of those might be a separate account in the bookkeeping.
Disclaimer: I'm not an accountant.
[1] There might not be a separate account for books unless Alice is a real books aficionado and a meticulous bookkeeper, so the account might also be "books, movies & music", "entertainment & culture", or just "personal items" depending on what granularity is desired/needed.
It might also be that such items are not considered to have financial value in the system (which would probably be the correct unless Alice collects books) and the debit ("to") would actually go in some kind of an (abstract) expenses account instead. Either way, both the value leaving cash/bank and the value "entering" some other account would be entered.
In a real world example you would be correct. This would fall under the “equity” of the accounting equation assets = liabilities + equity. The equity part can be confusing but is where many of the non obvious second entries end up.
Because double-entry accounting requires two (thus "double") entries for each transaction (i.e., Alice buys a book)
- one for the assets/liabilities account involved in sending or receiving the money ($30 credit, bank account)
- one for the income/expense account to which the transaction corresponds ($30 debit, "education" expense account)
one of the two entries is a credit and the other a debit
Remember, this was all done on paper before software with tagging and such existed.
I'll give a description shot, since I've been doing finance work recently. Other people can feel free to correct.
A company using double entry (as opposed to single) has a "chart of accounts." This means they have a bunch of imaginary accounts for tracking everything, including:
- Assets (e.g. cash on hand.)
- Liabilities (e.g. loans)
- Equity (e.g. investments in the company from outside parties)
- Income/Revenue: (edit: as PopAlongKid kid mentioned, I forgot this one. This could include sales revenue, but also things like interest.)
- Expenses (e.g. team lunch or a flight cost)
Some of these "accounts" may map to actual bank accounts: there is likely a liability account for a credit card or an asset account for the company checking.
Knowing all that, every time money is deposited or withdrawn (a transaction) the "double" references the fact that it's recorded in the journal (a.k.a ledger) of two accounts. (Edit: As bregma mentioned, one records where money is coming from and the other where it's going.) Often, an expense is often recorded in the checking "account" and the and the corresponding expense "account." E.g. a flight may be recorded in a travel expense "account," but you also record that the money came from the checking account. Every transaction is recorded in two places.
Beyond just being more accurate than single entry, this helps with important finance reports like Profit & Loss, since you can now see how money is moving around.
Edit: Now that I'm back on my desktop, these are a couple of useful links for understanding basic double entry bookkeeping: Accounting for Computer Scientists [0] and Accounting for Developers, Part I | Modern Treasury Journal [1]. What is a Sample Chart of Accounts for SASS Companies [2] illustrates some charts, which may be helpful for some folks.
> this helps with important finance reports [...] since you can now see how money is moving around.
This is the real benefit I've encountered. Any time I try to "simplify" financial recording for someone else and avoid double-entry, I inevitably end up wanting to perform a query that would be easy in a double-entry system but is not in any other system.
Right. I didn't mention that a chart of accounts can look different in different companies/sectors. Some accounts may be considered nested (software may even show them as nested.) Then you can roll the totals for all accounts of a type into a general category account like "Assets" or "Expenses." That makes it easier to answer questions like, "how much have we spent in total?"
>A company using double entry (as opposed to single) has a "chart of accounts." This means they have a bunch of imaginary accounts for tracking everything, including:
- Expenses (e.g. team lunch or a flight cost)
- Liabilities (e.g. loans)
- Equity (e.g. investments in the company from outside parties)
- Assets (e.g. cash on hand.)
Not sure why you didn't complete your list by adding "Income".
So double entry is defeated if you uses a computer to enter the entries. For example if you brought a laptop for 1000, but you accidently wrote 2000 AND the computer automatically entered 2000 in the asset account it would still balance even though it was a mistake to enter 2000.
In addition, you can still make the same mistake by hand for both entries. So I’m still not getting how double entries catch mistakes
There are several categories of mistake that you can make when bookkeeping. Some are caught by the double-entry system when a trial balance is prepared.
The error you've described is an "error of original entry" and will be invisible if you only look at the trial balance. It can ultimately be caught when you compare the banking ledger with what's actually in the bank.
Other errors that don't appear in the trial balance can be incredibly hard to detect and in fact, may never be noticed. This is where the real art of bookkeeping is IMO.
The types of errors that do affect the trial balance are things like forgetting to enter a purchase in the purchase ledger but entering the transaction into the banking ledger correctly. Silly errors really, but we can all need help to stop us making those.
When you reconciled the balance in your bank account / credit card statement against that in your set of accounts, you'd notice the error as the statement balance would be 1000 higher than reflected in your accounts.
In a general sense, it really doesn't matter, as long as you are consistent.
That said, there are accounting standards that define the general set of accounts for a particular industry, etc.
But every person having a set of books will want to customize it to some degree.
For instance in a personal set of books, if you want to track every person you pay, you might have accounts, 1 for every single person you have ever paid, ever.
That obviously can get pretty big! Others might not care that their electricity provider changed from Tootie inc. to Turtle inc, so they just have Utilities:Electricity as their account name.
Others might not care at all, and just have a very general "Expenses" account for things like that.
Make sense?
The important part is consistency of using the same accounts for the same transactions.
OK So it is somewhat open but you could use a set of standard accounts, I see.
Makes sense. Probably it's important to keep somewhat of a registers of accounts available to avoid making mistakes and to write directions on where things should go
There's also GAAP in the US and IFRS in Europe, which are standards for how certain things need to be done to be compliant. It's not specific about things like account names or how your ledger should be structured, but outlines many expectations and rules/constraints that build confidence in the resulting numbers.
Agreed, but every industry/sector might have their own set of standards that usually are overlays on top of GAAP/etc. For example in the US for state and local governments there is GASB: https://gasb.org
The chart can differ in different companies or sectors. In my mind, it comes back to what you want to be able to report on.
Some companies may have a larger and more detailed chart of accounts so that they can have very specific breakdowns of things. I've heard of big charts where each of a company's departments have specific accounts and all departmental transactions go there while the rest are lumped into a "Sales, General, and Admin" bucket. (Although I think it's more common to tag transactions with a department code these days?)
That said, categories can be broken down into sub-types beyond Assets/Liabilities/Equity/Income/Expenses. For example, assets are categorized based on how quickly they can be converted to liquid money and if they physically exist. So, under the assets account you may have accounts for current, fixed, and intangible (e.g. trademark or domain name) assets and you would record those appropriately.
Edit: To answer the question more directly, it depends on the company and how they've customized their accounts or guidelines. But, there are general accounting practices that mandate the need for specific things and common questions to be answered, so a lot similar structures and guidance emerge that a company's finance team could use to tell you where something belongs.
Every time money is exchanged, it has to come from somewhere and it has to go somewhere -- that's two places it need to be recorded (or "entered in the books").
Money can not be created out of thin air, and it can not be destroyed. Every movement of money has to be accounted for, which is why it's called "accounting". Double-entry accounting means you have to account for where the money comes from, and you have to account for where it goes, and each of those is a separate entry and it all has to add up to zero.
Where it can become confusing is when money leaves you or comes in from an external source. There are still two entries, but one entry is in one party's books and the other entry is the other's. For example, I get a paycheque and I enter my income in a little book with green paper and DB/CR columns. At the same time, my employer has entered an expense in their book. Double entries.
>Where it can become confusing is when money leaves you or comes in from an external source. There are still two entries, but one entry is in one party's books and the other entry is the other's. For example, I get a paycheque and I enter my income in a little book with green paper and DB/CR columns. At the same time, my employer has entered an expense in their book. Double entries.
I agree with your first two paragraphs but not with this last one. When money leaves you or comes in from an external source, there is always some proxy account for that external party in your own books. And the whole situation is mirrored in the accounting system of the external party (unless they are a consumer). Each party records two entries.
Yes. I have a proxy account with one entry (say, "expenses: bank fees"). They have a proxy account with one entry (say "income: bank fees"). Between the two proxy accounts there are two entries. Money can be neither created nor destroyed.
> Where it can become confusing is when money leaves you or comes in from an external source. There are still two entries, but one entry is in one party's books and the other entry is the other's. For example, I get a paycheque and I enter my income in a little book with green paper and DB/CR columns. At the same time, my employer has entered an expense in their book. Double entries.
NO.
I mean your employer probably has a set of books, but that's not true in your own local set of books.
In your local set of books you would have something like:
ACME, inc Employment Income $100 DEBIT
Bank Account $100 CREDIT
You are accounting for ACME, Inc's Employment expense in your set of books too.
When you send a payment to your Power Company:
Power Company Expense: $100 CREDIT
Bank Account: $100 DEBIT
I mean if you are categorizing expenses you might do something like that. If you aren't, you might title one account "Expenses" and spend it all there, it doesn't really matter what you call the accounts, just that you are consistent.
in my employment income account that money has not come out of thin air. Remember, money can not be created nor destroyed in this system. Somewhere there is a matching entry something like
bregma, services rendered $100 CREDIT
in my employer's books. And that money, in turn, was probably moved in from some other account internally. Mean time the only real movement of "money" was an electronic communication between two banks (my employers and mine), with a matching entry in an account in each.
Things like income accounts and expense accounts are not magic sources or sinks for money flows. They're just half of a double entry system with the other half somewhere else.
I agree generally speaking, but what does that have to do with your local books? Nothing.
You almost certainly don't have access to your employer's books.
Also, the ledger entries for "bregma, services rendered" i.e. payroll will be much more complicated than that, there will be taxes, deductions, etc they have to account for as well.
> what does that have to do with your local books?
It's how double-entry bookkeeping works. Money can neither be created nor destroyed. On your local books you have an account where money goes and appears to be destroyed, but in reality there is a doubled entry in someone else's books. Just because you're unaware of it does not mean it does not exist.
And it's true that bookkeepers will have splits in their ledger in which one transaction consists of multiple entries, but that's a convenient shortcut for consolidating multiple items each of which is one half of a double entry. It has no bearing on how double-entry bookkeeping works and just needlessly complicates a description of the fundamentals. It has only to do with conventions for recording double-entry bookkeeping, just like using DB and CR to indicate whether entry is moving money into or out of an account.
The fact that you have a counterparty with his own books has nothing to with the phrase “double-entry accounting”, it is a method of keeping your own books.
Sorry, but no. I have no idea why you think double entry means 1 of the entries is in some other persons books that you don't have access to is somehow useful. Double entry is 100% local to a singular set of books.
The point of double entry accounting is to avoid many simple mistakes. If you can't access a 3rd parties books to check, what is the point of double entry accounting, when you only hold a single entry?
I literally have no idea how you think this even remotely makes sense.
> Money can neither be created nor destroyed.
Totally as an aside, money can indeed be created and destroyed, the govt and even banks do it all the time[0]. But I agree practically speaking from an accounting perspective in a singular person/organizations books money isn't created or destroyed it's just moved around. But for double entry accounting, it's 100% not useful to talk about money in some other person's books, it's irrelevant.
Might be the slight fever talking, but wouldn't the debit and credit be exactly the other way around? When you get paid by your employer, in your books the money enters your bank account ("debit") and is coming from an (abstract) employment income account ("credit").
When you pay your power company, the money leaves your bank account ("credit") and enters the (abstract) power company expenses, utilities expenses, or whatever account ("debit").
That method only works if money can be created out of thin air, and also destroyed. The grandparent comment was pretty clear that money cannot be created out of thin air, nor can it be destroyed.
While money can’t be created or destroyed (unless you run a central bank…), value can be. Ledgers always have a specific perspective, and that perspective can assign a different value to something than someone else.
In the case of gifting something, from the perspective of the gifter, they destroyed some value they had on their books and got nothing of value in return. There’s an account type for tracking why your net worth decreased - Expense accounts. The giftee received value and they have an account to track why their net worth increased - Income accounts. If value was objective, then the net worth decrease on one side would exactly equal the net worth increase on the other.
With something like cash, the unit of account and the store of value are the same thing - so 100 USD objectively the same value in everyone’s ledger. But say you were gifted a painting. The gifter may have valued this painting at 100 USD, while the giftee actually thinks it’s worth 50 USD. If the gifter didn’t tell them the price, there would be no way of knowing they recorded different numbers. So in this transaction value was destroyed.
The same thing happens when you buy and sell things. Say the painting was sold instead of gifted, then the difference in what the buyer and seller thought the painting was worth is value that was created and destroyed. Each person’s net worth would go up or down depending on whether they thought the painting was a bargain or overpriced. When providing services, value is created at the moment of usage and a ledger will track the creation of value in your landscaping business.
> While money can’t be created or destroyed (unless you run a central bank…)
That's not the case. Money, of course, is just a promise to provide something of some defined value at some point in the future. Anyone can make such promises. Heck, that's why we invented accounting – to keep track of the promises outstanding and delivered!
If a bookkepper destroyed or created money they would be in a great deal of trouble and probably end up working for the state for two years less a day.
Money is just a promise. Anyone can create those. Which should be quite obvious. When you go to work to, as we literally say, make money, your employer is making a promise that in exchange for you work you can take something of some defined value later. Later, you will take that promise and turn it into something of value, such as food. Once spent, the money is destroyed. The promise is no longer valid. The deal is done.
Currency is a promise to a particular entity, such as a central bank. A central bank will loan you something of some value, you equally promise to give them something of equal value (we'll ignore interest for simplicity) back at a later date. Indeed, only the central bank can accept promises made to the central bank. If you accepted a promise on behalf of the central bank, without explicit authority, then you are quite right that trouble is coming your way.
Because there is a trust component required in promises, often promises made – such as the promise of your employer to feed you later – will be backed by a promise to the central bank. The central bank has a military to send if someone really tries to play nasty with promises made, so that carries a lot more trust than if you and I wrote up our own 'IOU'. This may be why you see money and currency as being one and the same. Often they are, but not necessarily so.
Accounting is simply for keeping track of promises. That's why we invented it. You don't need accounting for barter. It is the promises that necessitate accounting in order to keep track of what promises are outstanding and what are fulfilled. A bookkeeper doesn't create money per se, but they certainly account for money created and destroyed by the entity they are bookkeeping for.
I think you’re right that currency is technically what I meant by money in that sentence. Like you said most people equate the two, which is why I prefer to use the word “value” for the various promises we track in accounting. It just has less baggage with most people since it’s more abstract. Value can definitely be created or destroyed from the perspective of the entity whose net value we’re tracking.
AR and AP accounts track promises, and as you point out, bank accounts and cash are also conceptually no different than other AR account. I call these asset and liability accounts State accounts. They track the current state of your promises and expectations. Since a promise can be reneged or an expectation not met, we need accounts that balance changes in State accounts when value is created or destroyed. That’s what income and expense accounts do — which I call Change accounts [1]
> You don't need accounting for barter.
I get what you’re mean, but I think a good way to get your head around multi-currency accounting is to think of it as double-entry bartering. Each currency only has value because it can be swapped with another currency at a certain rate. Which is basically bartering. How many sheep for how much grain? How many USD for how many GBP?
The interesting part is bringing double-entry into this:
- how do you balance a transaction when the two sides are in different currencies?
- How do you track the exchange rate between currencies?
The answer to each question is the other question. You balance entries by adding two more lines that track gain/loss due to exchange rate fluctuations. I did a talk on this at Fintech Devcon [2] and we cover this in our docs [3]
> I prefer to use the word “value” for the various promises we track in accounting.
Value is the opposite side of the transaction, though. Money is the promise of value, not value itself.
> Which is basically bartering.
Yes, it most definitely is, but the difference with bartering, by definition, is that the value is always delivered immediately. As in, you give me grain and I give you sheep at the same time. We both have what we want, the deal is done, and there is no need for accounting as there is no reason to ever think about it again.
But if, instead, you give me grain and I give you nothing but agree to later give you sheep after they have been fed the grain and are ready for slaughter, then we have an unbalanced transaction. You gave me value, but I gave you nothing – just a promise.
Enter accounting. I record that you gave me grain and I record that I made you a promise (money created). You record that I gave you a promise and that you gave me grain. My books will show a loss (promises outstanding) and you will show a profit (promises yet to be delivered). This gives us both a reminder that the deal isn't yet done, which is useful because people are prone to forgetfulness. Also, perhaps even more significantly, you can pass on the promise. The person who finally receives the value in the future may not be the person who made the deal originally, so accounting is critical to settling the promises across a chain of trades.
No money was created or destroyed. The "cash gifted" account would have a corresponding entry in the recipients books reflecting the cash received. Unless he's delinquent about updating his books in which case it's implied but not realized. Few (unmedicated) individuals are going to track every transaction to that level though.
If it was important to account for the cash donation, the company would require a receipt in exchange. If it's part of a coverup the receipt may be for something unrelated but at least the books are in good order.
Cash went out. One half of the double entry is correct. But nothing came back in return. There is no corresponding element of trade to account for. The transaction doesn't balance. Which is obvious in human terms. That's the point of a gift – the transaction isn't supposed to balance! But formal accounting methods are not as fluid as people are.
So, of course, in reality money was created (and then destroyed, it being a gift) in order to make the transaction whole. But as far as this magical fairytale land where money can't be created the entry doesn't work. You can't account for nothing.
Let's say it's not a gift. Let's say someone is borrowing $1,000 cash instead. The same applies. There is no corresponding element in trade to account for. It doesn’t balance. Thus, when the cash goes out you need to create money out of thin air to satisfy the other side of the transaction, which is later destroyed when the cash is returned.
You're misunderstanding double-entry bookkeeping. Something does not have to come into the company got every transaction moving something out of the company. If your company gives $1000 to Billy, you document a $1000 debit from your gift account and a $1000 to Billy's account payable. The goal isn't to get any one account to zero but to get a source and destination recorded separately for every movement of funds.
Lending would be at least two sets of doubly-recorded transactions.
> The goal isn't to get any one account to zero but to get a source and destination recorded separately
Right, because transactions are actually two-sided. I give you something, you give me something in return. That's how people work with each other. And, as such, we account for a source and destination because that matches what actually happens.
But often times you only offer a promise. For example, I write some software for you, and in return you offer me food. But I'm not hungry right now, and I certainly don't want food that is going to spoil before I get around to eating it, so instead you promise to give me fresh food sometime in the future when I am hungry.
How do you account for that? You received software services, but gave nothing back in return other than a promise. Well, what if you recorded the promise? Software services in, promise out. You got your software, I get my food, the credit and debit accounts match. Everyone is happy.
Congratulations, you just created money out of thin air! -- And now, later on, I am feeling hungry and am ready to take you up on your food offer. You give me the food, I give back the promise, food out, promise in, I'm fed, debits match credits, and the money is destroyed.
That's exactly why we invented accounting: To keep track of the money being created and destroyed. You wouldn't need accounting if promises never needed to be made. Without promises, you'd have the software services, I'd have the food, and we'd have no reason to think about the transaction ever again. It is the promise that has us wanting to look back to make sure that promises outstanding are made good.
> Money can not be created out of thin air, and it can not be destroyed.
Yet accounting is necessary because money is created out of thin air. Money is just the representation of debt, an IOU. There needs to be a record of it in order to know that a debt was created and that a debt was destroyed.
More practically, let's say you give me corn today, and I promise to deliver some of the chickens fed that corn to you after it is ready to for slaughter. Money keeps track of the promise outstanding. We record that promise, or account for it if you will, so that we remember that there is a promise and so that we can later ensure that the promise was delivered upon as agreed. Something that becomes especially important when you realize that promises can be traded on to other people who weren't party to the initial deal. Perhaps you don't really want chicken, but would prefer a watch instead. Luckily the watch maker would like to eat chicken for dinner down the line, so you give him the promise of chicken in exchange for the watch. So on, and so on.
Realistically, double-entry accounting is really quadruple-entry accounting. You record that something was received and you record that a promise was made, then, later on, you record that something was delivered as promised and also record that the promise is no longer outstanding (or in reverse if you are on the opposite end of the transaction). A profit indicates that people still owe you things that you haven't collected upon. A loss indicates that you still owe people things that you haven't yet delivered.
From what I got out of the article and my own limited understanding of double entry bookkeeping, the "double" seems to be referring to the part where we split a transaction into credits and debits as opposed to a transaction with positive or negative balance. The doubling is happening with the labels we use to describe what's happening with the money.
From an individual account perspective, there's a doubling of the number of columns you could enter a transaction's amount into.
The core innovation of 'double entry' is that you can see the flow of money between accounts for every transaction.
This is possible because you (the accountant) are always adding a back-reference from the other account (hence the 'double' in 'double entry').
There's really not much to it. It throws people that are new to it for a loop, I think, because it is a strange way of behaving, and it isn't obvious why you're doing it until you have to track down something that doesn't balance. It's just a disciplined behavior that accountants started using because it allows one to track things that were difficult without it.
this is probably not true, but I heard that this stuff predates the idea of negative numbers so you have db and cr accounts that offset each other without negatives.
$100 appears in your account. That’s one part. The other part depends on why.
* you moved money from another account, the double is -100 in that account.
* you sold stuff, +100 in income.
* you borrowed some money, +100 in ‘debt’.
In a physical book each of these categories would have a left and right column, and each transaction has numbers in one left and one right column. Or in many columns but the sums of left vs right columns must be the same.
Always needs two entries to keep assets equaling liabilities plus equity. If you do anything it effects both sides of the equation, thus “double entry” is required to keep this relationship. It’s the accounting equation.
How would you salvage the article to actually explain the "double" part in detail? Could you do it purely from Bob's (or Alice's) perspective?