As an owner of a recently started business venture, knowledge on the different types of bookkeeping systems can be able that will help you in deciding the type of bookkeeping system that you may choose for your online business transactions. You might also get information related to the completely different strategies of book keeping being adopted globally. There are actually 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 just started falls under the small scale category, single entry book keeping system would be very useful. This type of system maintains a report of the business transactions related to money disbursement, money receipt, purchases and sales. This type of system is more of a casual system suitable for small business transactions. The bookkeeper will usually use this system to maintain a daily summary of the money receipts and money payments and also a monthly summary of the cash receipts and payments. In a single entry book keeping procedure, each transaction will have an effect on only one account. Within 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 money receipt or cash deposit account only be updated with the amount received. The corresponding entry in a sales account will not be made in single entry bookkeeping system.
Hence it does not provide the complete financial standing of the varied systems within the business. If you need a detailed accounting of the different systems concerned in enterprise transactions, you can go for a double entry system.
Double entry bookkeeping system. This is the type of system that’s most commonly used by the bookkeeper or an accountant in any business organization. This system is utilized by the bookkeeper to keep full accounting details of the enterprise transactions. This system additionally introduces the idea of debit and credit. As there are lots of accounting systems in a business, a debit entry in one of the accounting system will often be accompanied by a credit entry in one other accounting system or in more than one accounting system. Equally, 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 may 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 handbook method of bookkeeping and the opposite is the computerised methodology of bookkeeping.
Manual bookkeeping is the oldest type of bookkeeping the place in the bookkeeper can be using a journal book or a ledger book to record the totally different accounting entries associated to the business transactions. Small enterprise owners nonetheless choose manual technique of bookkeeping as it is economical and is suitable for sustaining less complex business transactions.
Computerised bookkeeping helps the bookkeeper to perform bookkeeping of complicated enterprise transactions in a a lot easier and quicker manner. An accounting software system is normally used to do the accounting entries. The advantage this system has over the manual bookkeeping system is in the ease of producing reports and performing calculations. Complicated calculations will be performed accurately and quickly.
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