Why Is It Called a "Double Entry" Bookkeeping System?

You have already seen examples of the types of accounts held in each of the ledgers. You now have to think of the business as nothing else but a collection of accounts. Some of these accounts owe the business money and some of them are owed money by the business. All of the accounts must balance. At any one time the total value of the accounts in credit must equal the total value of the accounts in debt. When the business makes any transaction at all money is moved from one account to another. If for example Pepe makes a payment of £200.00 for some flour which he purchased from Alberto's wholesalers then Alberto's account is debited by £200.00. Alberto is the receiver of money and the transaction is therefore entered on the debit side. (Remember the principle; Debit the receiver, credit the giver.)

Alberto's Account
DR						CR
Debit Side						Credit Side
Date	Details		Folio	Amount		Date	Details		Folio	Amount
							Balance b/d			500.00
May 10	Purchase of flour		XYZ	200.00

Alberto is one of Pepe's creditors. He supplies Pepe with flour on a regular basis. You can see that at the beginning of the accounting period Pepe owed Alberto £500.00. After the payment was made this figure will be reduced to £300.00. Alberto has received money and his account must be debited. In order that the accounts balance another account must be credited. In this case it is the bank account.

Bank Account - Pepe's Pizza Parlour
DR						CR
Debit Side						Credit Side
Date	Details		Folio	Amount		Date	Details		Folio	Amount
							Balance b/d			1,640.00
						May 10	Payment for flour		XYZ	200.00
						May 23	Payment for oven liner		C950	160.00
May 31	Balance c/d			2,000.00
				2,000.00						2,000.00
							Balance b/d			2,000.00

In this case the bank account is already Pepe's creditor by the fact that Pepe has an overdraft. Before the payment was made to Alberto, Pepe owed the bank £1,640. With a £200.00 payment to Alberto and one other payment this figure has risen to £2,000.00. Let's see another example of double entries.

Source:
http://www.bized.co.uk/