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Different Types and Strategies of Bookkeeping Systems
As an owner of a not too long ago started business venture, knowledge on the completely different types of bookkeeping systems can be able that will help you in deciding the type of bookkeeping system that you would select for your enterprise transactions. You would additionally get data associated to the totally different strategies of book keeping being adopted globally. There are literally 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 class, single entry book keeping system would be very useful. This type of system maintains a file of the enterprise transactions associated to cash disbursement, cash 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 day by day summary of the cash receipts and cash payments and also a monthly summary of the money receipts and payments. In a single entry book keeping procedure, every transaction will affect only one account. Within the case of a double entry transaction, every transaction would have an entry on each the accounts.
If there is a sale of a particular item, the cash 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 whole financial standing of the assorted systems within the business. If you want a detailed accounting of the completely different systems involved in business transactions, you can 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 business organization. This system is utilized 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 business, a debit entry in one of many accounting system will usually 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 financial efficiency of a company can be clearly ascertained based on the accounting details obtained from the double entry accounting systems.
Basically, there are two methods of book keeping. One is the handbook technique of bookkeeping and the opposite is the computerised technique of bookkeeping.
Handbook bookkeeping is the oldest form of bookkeeping the place within the bookkeeper shall be utilizing a journal book or a ledger book to report the totally different accounting entries associated to the business transactions. Small enterprise owners nonetheless desire guide technique of bookkeeping as it is economical and is suitable for maintaining less advanced enterprise transactions.
Computerised bookkeeping helps the bookkeeper to carry out bookkeeping of complex enterprise transactions in a much simpler and faster manner. An accounting software system is normally used to do the accounting entries. The advantage this system has over the manual bookkeeping system is within the ease of producing reports and performing calculations. Complicated calculations can be performed accurately and quickly.
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