Types Of 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. 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.
For businesses that fall under the small scale category, then it will be ideal to use a single entry bookkeeping system. This kind of system is used for maintaining record of business transactions that’s related to cash receipt, cash disbursements, sales and purchases. Actually, this system is more of an informal system applicable to small business transactions.
Here, what the bookkeeper does is use the system 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. Every single transaction affects just one account in a single entry bookkeeping procedure. As for double entry transaction however, each transaction will receive an entry for both accounts.
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Say for example that there is a sale for certain item, then the cash deposit or receipt account is updated only with received amount. The corresponding entry in sales account will not be made in a single entry bookkeeping system. 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 regards to double entry bookkeeping system, this is a kind of bookkeeping system that is mostly used by accountants or bookkeepers in a 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. Because of the reason that there are several accounting systems that are implemented in a business, debit entry in one of the accounting systems will be accompanied by credit entry as well but in a 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 financial performance of the company may be ascertained clearly based on acquired accounting details 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. In computerized on the other hand, it’s like manual processes but computerized.