Double-entry bookkeeping

Double-entry bookkeeping (divkāršā ieraksta sistēma) is the accounting method in which each business transaction is recorded by entering the same amount on the debit side of one account and the credit side of another, following the chart of accounts.

It is the default in Latvia: the Accounting Law requires registers to be kept in double entry unless the law provides an exception. Capital companies such as an SIA or an AS have no exception.

The link between the accounts in an entry is called account correspondence. Because every transaction appears on both sides for the same amount, total debits equal total credits, and the account balances produce the balance sheet and the profit or loss account.

An individual merchant may keep double-entry books even where single entry would be allowed. If they pay personal income tax, they must then also prepare a balance sheet and a revenue and expenditure statement as the Cabinet prescribes.