Today we reach the final daily step for each individual transaction: recordation. Don’t get too excited, the accounting cycle is far from over, but many aspects of it take place at the end of the accounting period.

Double-entry accounting dictates that each transaction be recorded in at least two accounts. Debits and credits need to balance at the end of the transaction. We’ll look at a business’s periodic payment for a domain name as an example.

When the payment is made, either a bank account balance goes down or a credit card balance goes up — this isn’t just a loss of money, it’s an expense, which is a necessary expenditure that helps to generate future income. That means an expense account balance goes up at the same time. The bank account or credit card is credited, and the expense account is debited to record the transaction.

Once each of the business’s daily transactions are recorded, they can be ignored until the end of the period. We’ll pick the Accounting Cycle back up at a later date, when we explore what happens at the end of an accounting period and the process of closing the books.