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Understanding Double Entry Accounting

Laura Hofstrand and, Don Hofstrand (April, 2009)

Summary

Farm families have traditionally used the single entry (often referred to as cash) method of accounting for their farm business. This is a relatively simple method of accounting where items are listed as income and expenses when a cash transaction occurs. Double entry accounting goes a step further. Every time an income or expense transaction occurs and an entry is made, the net worth statement is updated at the same time.