[bluepencil123]

The 'double' in double entry book-keeping is related only to the book keepers own records/books. It has nothing to do with counter party's record keeping.

If Alice purchases a house worth $100,000 in cash, then 2 (double) accounts will get effected. Her cash account will decrease (Credit) by $100,100 and simultaneously her House equity account (or any other appropriate name such as immovable asset etc) will increase by $100,000 (Debit).

This can be recorded in a 3 column table as

  Credit account -- value -- Debit account
  Cash -- $100,000 -- House equity

In the above transaction, two accounts were effected. Hence the name double entry. This gives a truer picture of ones assets and liabilities.

Note: 1. Debit and credit dont have much to do with increase decrease. 2. A transaction can be modelled to have affect more than 2 account. For example if Alice were to make the purchase with $80,000 loan, then the book keeping could go like

  Credit Lender $80,000
  Credit Cash $20,000
  Debit House Equity $100,000

For the sake of better understanding, if one is uncomfortable with having one record affecting 3 accounts, one can be more robust and split the loan and the purchase into 2 transactions. After all, taking a loan and purchasing a house are 2 different events(transactions).

  Transaction one ->
  Credit Lender $80,000
  Debit Cash $80,000

  Transaction two ->
  Credit Cash $100,000
  Debit House equity $100,000

edit 1: attempt at better formatting

[datavirtue]

Don't forget the depreciation, interest, maintenance, and tax accounts if you want to track those against the real estate cost basis for various purposes. You also need to figure out how to create and map accounts to IRS rules or you could put yourself in a real bind when it comes to figuring out tax liabilities or deductions.

[someguydave]

Or you can keep different sets of books for different purposes