Double entry accounting

Double entry accounting is like playing with toy blocks. You have two different kinds of blocks, one for money coming in and one for money going out. These blocks are like pieces of a puzzle and they fit together to show how much money a person or business has.

Every time you spend money, you put a block in the "going out" pile. If you receive money, you put a block in the "coming in" pile. But you don't stop there! You also need to write down why you spent or received that money. This is like putting a label on the block so you know what it's for.

Now, here's the cool part. You take all of the "going out" blocks and put them on one side of a seesaw. Then, you take all of the "coming in" blocks and put them on the other side of the seesaw. If the seesaw is level, that means you spent and received the same amount of money. If the "going out" side is heavier, that means you spent more money than you received. If the "coming in" side is heavier, that means you received more money than you spent.

This is called double entry accounting because you have to record both the "coming in" and "going out" blocks for every transaction. It helps you keep track of all the money that goes in and out of your business, and it makes it easy for others to understand your finances too!