Systems Used In Bookkeeping Services
Being able to have knowledge on the different kinds of bookkeeping systems can help to decide what system is more appropriate for your business transactions, which is vital for any business owners. There are 2 kinds of bookkeeping systems used today as a matter of fact and these are Double Entry Bookkeeping systems and Single Entry Bookkeeping systems.
When it comes to single entry bookkeeping system, this is perfect for businesses under small scale category. This system is used to maintain record of business transactions related to cash receipt, cash disbursements, sales and purchases. Actually, this system is more of an informal system applicable to small business transactions.
The bookkeeper here is typically using this system to be able to maintain the day to day summary of cash payments and receipts and at the same time, the monthly summary of cash payments and receipts. In single entry bookkeeping procedure, every single transaction affects just one account. As for double entry transaction however, each transaction will receive an entry for both accounts.
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If there’s a sale for a certain item, the cash deposit or receipt account only updated with received amount. In a single entry bookkeeping system, the corresponding entry in the sales account will not be created. Hence, it doesn’t provide a complete financial standing of different systems in the business. If you are rooting for a detailed transaction of different systems that are involved in the business transaction, then that is when you should opt for double entry system.
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In double entry bookkeeping system, this is a bookkeeping system that is used typically by accountant or bookkeeper in any business. This system is used to be able complete accounting details of transactions made by the business and also, introducing the concept of credit and debit. Due to the reason that there are multiple accounting systems implemented in a business, debit entry in among the accounting systems would be accompanied by credit entry in a different accounting system or perhaps, in more than one accounting system. Similarly, the bookkeepers need to make various debit entries for one credit entry. The company’s financial performance can be ascertained clearly based on accounting details acquired from double entry bookkeeping systems.
There are two methods on how bookkeeping is done one of which is manual bookkeeping and the other is computerized bookkeeping. In manual bookkeeping, the bookkeeper makes use of journal or ledger book to be able to record different accounting entries that are related to business transactions. On the other hand, computerized bookkeeping does the same thing in manual processes only here, it’s computerized.