As an owner of a just lately started business venture, knowledge on the completely different types of bookkeeping systems might be able that will help you in deciding the type of bookkeeping system that you would select for your enterprise transactions. You could possibly also get info associated to the totally different methods of book keeping being adopted globally. There are actually two types of book keeping systems namely Single Entry Bookkeeping systems and Double Entry Bookkeeping systems.
Single entry bookkeeping systems. If the type of Enterprise that you’ve got just started falls under the small scale category, single entry book keeping system would be very useful. This type of system maintains a document of the business transactions related to cash disbursement, money receipt, purchases and sales. This type of system is more of a casual system suitable for small enterprise transactions. The bookkeeper will normally use this system to keep up a every day abstract of the money receipts and money payments and also a month-to-month abstract of the money receipts and payments. In a single entry book keeping procedure, every transaction will have an effect on only one account. Within the case of a double entry transaction, every transaction would have an entry on each the accounts.
If there’s a sale of a particular item, the cash receipt or cash deposit account only be updated with the quantity received. The corresponding entry in a sales account will not be made in single entry bookkeeping system.
Therefore it does not provide the complete financial standing of the varied systems within the business. If you’d like a detailed accounting of the totally different systems involved in business transactions, you may opt for a double entry system.
Double entry bookkeeping system. This is the type of system that is most commonly utilized by the bookkeeper or an accountant in any enterprise organization. This system is used by the bookkeeper to keep complete accounting particulars of the business transactions. This system also introduces the idea of debit and credit. As there are various accounting systems in a business, a debit entry in one of the accounting system will normally be accompanied by a credit entry in another accounting system or in more than one accounting system. Similarly, a bookkeeper is perhaps required to make more than one debit entry for a single credit entry. The financial efficiency of an organization may be clearly ascertained primarily based on the accounting details obtained from the double entry accounting systems.
Basically, there are methods of book keeping. One is the handbook technique of bookkeeping and the other is the computerised method of bookkeeping.
Handbook bookkeeping is the oldest form of bookkeeping the place within the bookkeeper shall be using a journal book or a ledger book to report the different accounting entries related to the business transactions. Small enterprise owners still choose manual technique of bookkeeping as it is economical and is suitable for maintaining less complicated business transactions.
Computerised bookkeeping helps the bookkeeper to perform bookkeeping of advanced business transactions in a much easier and faster manner. An accounting software system is normally used to do the accounting entries. The advantage this system has over the manual bookkeeping system is within the ease of generating reports and performing calculations. Complex calculations might be carried out accurately and quickly.
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