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The double-entry bookkeeping system was codified in the 15th century and refers to a set of rules for recording financial information in a financial accounting system in which every transaction or event changes at least two different accounts.[1] In modern accounting this is done using debits and credits within the accounting equation assets = liabilities + equity. The accounting equation serves as a kind of error-detection system if at any point the sum of debits does not equal the corresponding sum of credits, an error has occurred. Since several different types of errors result in equal sums for debits and credits, double-entry accounting is not a guarantee that no errors have been made. Double-entry bookkeeping has been considered a fundamental innovation and a cornerstone of Capitalism by such thinkers as Werner Sombart and Max Weber, Sombart writing in "Medieval and Modern Commercial Enterprise" that[8] An accounting system records, retains and reproduces financial information relating to financial transaction flows and financial position. Financial Transaction Flows encompass primarily inflows on account of incomes and outflows on account of expenses. Elements of financial position, including property, money received, or money spent, are assigned to one of the primary groups i.e. assets, liabilities, and equity.[9]
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