In double-entry bookkeeping, why does spending cash credit the cash account and vice versa?

In double-entry bookkeeping, why does spending cash credit the cash account and vice versa?

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  1. Double-entry bookkeeping is a financial transaction classification system that was invented by the Venetian merchants over 500 years ago to record the movement of economic resources as they flow from a source (credit) to a destination (debit).
    These terms ‘debit & credit’ come from the Latin terms ‘credre and debere’ which mean ‘to entrust’ and ‘to owe’ respectively. So when an owner invests say $10,000 into a business they ‘entrust’ (credit) to the business and the business with its cash of $10,000, now ‘owes an equivalent amount to the owners’ (debit). So the flow of economic resources is
    from
    the owners (credit)
    to
    the cash account of the business (debit)
    Conversely when $1,000 from the cash account is used to say buy stock, there is a flow of economic resources
    from
    the cash account (credit)
    to
    stock (debit).
    If this explanation is still too difficult for you to understand, then just remember the following table to explain why in double-entry bookkeeping, the cash account is debited when it increases and credited when it decreases.
    See cash at bank is an Asset. An asset is an item of econ…

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