Understanding how double entry works

[karim-elngr]

Hi all,

I was going through the documentation in the website and read that the formance ledger is a double entry ledger, but form what I saw here double entry means that we have a source and a destination where money moves, but in accounting terms double entry is not just about moving money from a source to a destination rather it is about ensuring that the accounting principles remain solid that is assets = equity + liability for example if we charge customer money then we need to add this money to our cash account and also recognize this as profit, lets take a sample sale of 100$

Sample Entries Upon Sale: Debit Cash Account: $100 (increasing assets) Credit Revenue Account: $100 (increasing equity through increased revenue)

Upon Recognizing Cost of Goods Sold: Debit COGS Account: $60 (increasing expense, which decreases equity) Credit Inventory Account: $60 (decreasing assets, assuming the product was previously inventoried)

In those terms we are not simply moving money from one account to another but trying to model this operation

1. Move money from @world to cash
2. Move money from @world to revenue

And then 1- Move money from inventory to expense

What I am trying to say is we are not always moving money from one account to another but in some cases we increase both accounts, is there a clean way to achieve this