What Systems And Methods Are Used In Bookkeeping Services?
As a business owner, being able to have knowledge of different kinds of bookkeeping systems will help you to decide what kind of system will be more appropriate for your business transactions. Well the truth is, there are 2 kinds of bookkeeping systems that are being used nowadays and these include 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. For this type of system, it is primarily used for the purpose of maintaining business transactions related to cash receipt, cash disbursements, sales and purchases. This system is actually more of informal system that is 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. When it comes to single entry bookkeeping procedure, only one account is affected by every transaction made. In case of a double entry transaction on the other hand, every transaction would have entry on 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. The corresponding entry in sales account will not be made in a single entry bookkeeping system. As a result, it isn’t providing a thorough financial standing of various systems in the business. You should go for a double entry system only if you’re rooting to have a more detailed transaction of different systems involved in the business transaction.
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Now in double entry bookkeeping system, it is a type of bookkeeping system that is typically used by an accountant or bookkeeper in any business. This system is mostly used to complete the accounting details of transactions that are made by the business and at the same time, to introduce the concept of credit and debit. Mainly because of the reason that there are a number of accounting systems used in bigger businesses, debit entry is one of those accounting systems that’ll be accompanied by a credit entry but in different accounting system or perhaps, in more than one accounting system. And likewise, the bookkeepers should have different 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.
Manual bookkeeping and the other is computerized bookkeeping are basically the two methods of how bookkeeping is done. Manual as what the name suggests is the oldest method of bookkeeping in which the bookkeeper uses a journal or ledger book in recording different accounting entries that are related to business transactions. In computerized on the other hand, it’s like manual processes but computerized.