I'm a software developer, and I'm writing a bookkeeping app for my personal finances and freelance work. It's working pretty well, but one point about double entry bookkeeping confuses me. The descriptions I've seen of the system usually say something like what the Wikipedia page says:

every entry to an account requires a corresponding and opposite entry to a different account

But the purpose of this seems to be keep the accounting equation in balance. (Assets = Liabilities + Equity + Income - Expenses). That might allow a transaction without exact pairings of entries. For example, something like this:

Account Amount
Bank Account credit $100
Expenses/Equipment debit $95
Expenses/Tax debit $5

My software groups these under a single transaction in its database. And for each transaction, credits and debits are balanced. Do you think that is correct, or do you foresee some kind of problem by not having every entry within a transaction paired with another entry?

  • 4
    It is definitely valid to credit one account and debit multiple accounts (or vice versa) so long as the amounts add up. – Justin Cave Apr 7 at 18:47
  • Thanks Justin, for the clarification! – Rob N Apr 7 at 21:19