As an owner of a recently started enterprise venture, knowledge on the completely different types of bookkeeping systems will be able that can assist you in deciding the type of bookkeeping system that you may select for your business transactions. You may additionally get info associated to the completely different strategies 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 Business that you’ve got just started falls under the small scale class, single entry book keeping system would be very useful. This type of system maintains a record of the business transactions associated to money disbursement, money receipt, purchases and sales. This type of system is more of an informal system suitable for small business transactions. The bookkeeper will often use this system to take care of a each day summary of the money receipts and cash payments and in addition a month-to-month abstract of the cash receipts and payments. In a single entry book keeping procedure, each transaction will affect only one account. In the case of a double entry transaction, each and every transaction would have an entry on each the accounts.
If there is a sale of a particular item, the money receipt or money deposit account only be updated with the amount received. The corresponding entry in a sales account is not going to be made in single entry bookkeeping system.
Hence it does not provide the complete monetary standing of the various systems in the business. If you would like a detailed accounting of the different systems concerned in business transactions, you might go for a double entry system.
Double entry bookkeeping system. This is the type of system that’s most commonly utilized by the bookkeeper or an accountant in any enterprise organization. This system is used by the bookkeeper to keep complete accounting details of the business transactions. This system additionally introduces the concept of debit and credit. As there are numerous accounting systems in a enterprise, a debit entry in one of the accounting system will usually be accompanied by a credit entry in one other 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 monetary performance of an organization might be clearly ascertained based on the accounting particulars obtained from the double entry accounting systems.
Basically, there are methods of book keeping. One is the manual technique of bookkeeping and the other is the computerised method of bookkeeping.
Guide bookkeeping is the oldest type of bookkeeping where in the bookkeeper will be using a journal book or a ledger book to record the completely different accounting entries related to the business transactions. Small business owners still want 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 complicated business transactions in a a lot simpler and faster manner. An accounting software system is usually used to do the accounting entries. The advantage this system has over the guide bookkeeping system is in the ease of generating reports and performing calculations. Complex calculations will be carried out accurately and quickly.
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