A sudden drop in debtors' assets or shareholders' equity can be a credit to an account, referred to as “CR”. A sudden increase in equity or liabilities is either a “DA” or a “DF”. A sudden drop in shareholders equity is referred to as a “DF”.
Using the double entry system, accounting records both the debit and the credit. In a traditional way of recording the credit and debit transactions, only the debit is recorded, so that it could be easily withdrawn by the debtor. The double-entry system takes care of the situation, but with a slight drawback: if a debtor withdraws all his assets in a single transaction, the entire credit will be recorded.
Another problem with the double-entry system is that it can be easily manipulated by a clever and well-informed accountant. In traditional accounts, assets are divided into categories. A debtor could divide his credit into different categories and then withdraw all his assets from the category that is lower than his current liability. A financial expert may also manipulate this situation.
Another disadvantage of the double-entry accounting system is that it may be difficult for investors to identify when their money is being misused or mis-deposited. It can be difficult to detect and verify this kind of financial manipulation, especially if a borrower has a large number of debts. In some cases, even an audit of the accounting books may not reveal the misuse.
Another disadvantage of using the double-entry system is that it has been considered a time-consuming task. If a debtor has a large number of debts, he has to record all the transactions in two different books. This is quite time consuming, especially when it is done manually. The double-entry system has a much faster recording rate and makes it possible to record more transactions in less time.
Credit card companies may have problems with double-entry because of their inability to monitor every transaction. There are no single book to record all credit cards purchases made and all purchases made with the card, since they are issued to different creditors.
Some credit card companies, in an attempt to limit abuse, have their own double-entry system. In such a system, a creditor enters his credit and debit transactions into separate books. A card company may have separate books for each type of credit card purchase, even if there is no connection between the transactions made by the cardholder and the card.
For this reason, some card issuers may report the transactions of the cardholder to the same company for which he is making purchases. Thus, there will be double entries made for two different companies.
Some credit card companies have implemented systems in which all card transactions are recorded in a single book. In such a system, credit card companies make separate books for different types of purchases, and they do not have two separate books.
Some credit card companies have even gone so far as to create a special section of their credit books, where they store the entries made by their clients. When the credit cardholder purchases an item, he enters all the details in this section. He does not enter the same information twice.
The credit card companies maintain the records for a certain period of time, and the customer is allowed to review them if he wishes. before the entire record is entered into the main credit book.
Credit card companies usually offer discounts on purchases made with credit cards to their customers who maintain a high level of creditworthiness. They also offer incentives to those who spend a lot of money on purchases. Cards with higher spending limits may have their balance reduced each month.