As an owner of a not too long ago started enterprise venture, knowledge on the completely different types of bookkeeping systems will likely be able to help you in deciding the type of bookkeeping system that you can choose for your online business transactions. You could possibly additionally get information related to the different methods of book keeping being adopted globally. There are literally 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 have just started falls under the small scale category, single entry book keeping system could be very useful. This type of system maintains a document of the business transactions related to money disbursement, cash receipt, purchases and sales. This type of system is more of an off-the-cuff system suitable for small business transactions. The bookkeeper will normally use this system to take care of a each day abstract of the money receipts and cash payments and likewise a monthly abstract of the cash receipts and payments. In a single entry book keeping procedure, each transaction will have an effect on only one account. In the case of a double entry transaction, every transaction would have an entry on both 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 is not going to be made in single entry bookkeeping system.
Hence it would not provide the complete monetary standing of the assorted systems within the business. If you need a detailed accounting of the different systems concerned in enterprise transactions, you may opt for a double entry system.
Double entry bookkeeping system. This is the type of system that is most commonly used by the bookkeeper or an accountant in any enterprise organization. This system is used by the bookkeeper to keep full accounting particulars of the enterprise transactions. This system additionally introduces the idea of debit and credit. As there are lots of accounting systems in a enterprise, a debit entry in one of the accounting system will usually be accompanied by a credit entry in another accounting system or in more than one accounting system. Similarly, a bookkeeper is likely to be required to make more than one debit entry for a single credit entry. The financial performance of an organization will be clearly ascertained primarily based on the accounting details obtained from the double entry accounting systems.
Basically, there are two methods of book keeping. One is the manual technique of bookkeeping and the opposite is the computerised methodology of bookkeeping.
Handbook bookkeeping is the oldest form of bookkeeping the place in the bookkeeper can be using a journal book or a ledger book to record the different accounting entries related to the business transactions. Small enterprise owners still favor handbook method of bookkeeping as it is economical and is suitable for maintaining less advanced business transactions.
Computerised bookkeeping helps the bookkeeper to perform bookkeeping of complex enterprise transactions in a a lot easier and faster manner. An accounting software system is often used to do the accounting entries. The advantage this system has over the handbook bookkeeping system is in the ease of producing reports and performing calculations. Advanced calculations can be performed accurately and quickly.
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