Thus, every transaction is recorded in two accounts i.e. For every transaction recorded, a credit to one account is matched with a debit of the same amount to another. In this system, the financial transactions and assets of a business are distributed among numerous accounts, each of which may be represented by a name or numeric code. Single-entry bookkeeping is ideally suited to sole traders and other small businesses for whom double-entry bookkeeping would be too complex and time-consuming to be justified for the additional information it provides. The simpler and quicker bookkeeping system to operate and maintain, this essentially involves a running chronological record of receipts and payments made. These are known as single-entry bookkeeping and double-entry bookkeeping. In practice, one of two systems is generally adhered to. Whether your financial records are kept in hard copy books or in electronic data form, there is a limited number of standard systems governing the manner in which they are organised and presented. Some businesses still use this method.īut with the advent and growth of computer technology, software, databases and remote data storage facilities, financial records have increasingly been kept in time-saving and convenient digital media formats. Traditionally, these records were kept in physical books called account books, hence the name bookkeeping. This includes purchases and sales and all forms of expenditure and income. Bookkeeping is the ongoing recording of the financial transactions conducted by a business or other organisation.
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