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Different Types and Strategies of Bookkeeping Systems
As an owner of a recently started enterprise venture, knowledge on the totally different types of bookkeeping systems will probably be able that can assist you in deciding the type of bookkeeping system that you could possibly select for your small business transactions. You could possibly also get information related to the 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 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 enterprise transactions related to money disbursement, cash 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 keep up a daily abstract of the cash receipts and money payments and likewise a month-to-month summary of the money receipts and payments. In a single entry book keeping procedure, every transaction will have an effect on only one account. In the case of a double entry transaction, each transaction would have an entry on each the accounts.
If there's a sale of a particular item, the cash receipt or money 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 would not provide the entire monetary standing of the assorted systems within the business. In order for you a detailed accounting of the totally different systems involved in enterprise transactions, you would 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 details of the enterprise transactions. This system additionally introduces the idea of debit and credit. As there are numerous accounting systems in a enterprise, a debit entry in one of many 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 may be required to make more than one debit entry for a single credit entry. The monetary performance of an organization might be clearly ascertained primarily based on the accounting details obtained from the double entry accounting systems.
Basically, there are two strategies of book keeping. One is the manual technique of bookkeeping and the other is the computerised methodology of bookkeeping.
Manual bookkeeping is the oldest form of bookkeeping where within the bookkeeper might be using a journal book or a ledger book to report the completely different accounting entries associated to the business transactions. Small business owners still favor handbook technique of bookkeeping as it is economical and is suitable for maintaining less advanced business transactions.
Computerised bookkeeping helps the bookkeeper to carry out bookkeeping of complicated enterprise transactions in a much easier and sooner 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. Advanced calculations might be carried out accurately and quickly.
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