In accounting methodology, the system of accounts plays a special role, with its help, information is displayed using the double entry method. Accounts that are affected in one business transaction by the double entry method are called offset accounts.
Correspondence of accounts in accounting
Business transactions cause changes in the balance sheet that are of a dual nature. They affect two interrelated accounting items and two balance sheet items. Accounting accounts must reflect the state of the same objects, as well as their movement, therefore, each operation must be displayed in the same amount on at least two interconnected accounts. The double entry of transaction data shows the addresses of these relationships between accounts, this relationship is called account correspondence. Corresponding accounts are considered accounts that are affected in one business transaction by the double entry method.
Drawing up correspondence invoices
Double entry includes three main components - a description of the operation, credited and debited accounts, and each of these components is expressed in a certain amount. Accounts are assigned numeric codes, their numbers, and the content of the operation can be expressed using its number and amount. Each transaction must be assigned a sequential number, it indicates the reflection of this business transaction. For this purpose, cash books, registration journals and other accounting registers are kept.
Business transactions are recorded for control purposes, first they are displayed in chronological registration as a completed act, accompanied by documentary evidence, and then in the system registration as posting transactions to offsetting accounts.
The value of double entry in accounting accounts
As a rule, the content of the business transaction is not written on the accounting accounts, it is replaced by a reference to a specific number, and the results of posting to accounts are expressed in one monetary equivalent. A double entry contains information reflecting changes in objects on interconnected offsetting accounts, as well as the nature of the direction of movement of accounting objects. It also contains all the information about the ongoing business processes, it is used to control the reliability of transactions and check the correctness of their reflection in the system of accounting accounts. Reliability is achieved by reconciling the records of debit and credit transactions, as well as account balances. If there is no equality in turnover and balance, this signals errors that were made when registering data on accounts.
