Double entry accounting is the concept that every transaction has at least two effects--either to the balance sheet or income statement. This concept is an important principal of accounting because it shows the full accounting picture of your business. It also allows a company to create financial statements.

Many people may be scared of double entry accounting, but it doesn't have to be that way. I've had people tell me that they took an accounting course or two in college and felt overwhelmed. These courses are usually geared towards preparing students to work for large audit firms. The point is to understand full accrual accounting for mid to large companies.

Double entry accounting for smaller closely-held companies can be easier to understand and learn. It provides the basis to create financial statements which may be used for different purposes than financial statements for large companies. For example, larger businesses may need to issue GAAP financial statements. Smaller closely-held companies may not.

Financial statements for smaller closely-held companies may be used for internal management decisions, applying for business bank loans, or the business's tax returns. Also, they may be put together under different accounting standards than GAAP. For example, a CPA might compile financial statements that are in line with other comprehensive basis of accounting (OCBOA). These are usually tax/cash basis or modified-cash basis financial statements.

I've added a link to an interesting NY Times article on how double entry accounting was a important part of capitalism throughout history. For example, the Italian Renaissance depended on a population that was fluent in accounting.