OVERVIEW OF Accounting And Book Keeping
Accounting is the process or function of placing financial accounts. Each company should maintain proper books of accounts of their affairs. Accounting can be describ as communicating the financial health of a business or organization for any and all interested parties. This is a way to assess the future of a unit for property, liabilities and cash flows, or all current and future investors. It is a business life, and all types of businesses have basic information that is record to achieve that work.
Accounting is the process of storage, sorting and recording of financial transactions. All businesses are requir by law to present their accounts to the Income Tax (IT) department, and most also need to file them with the Ministry of Corporate Affairs. Many start-ups quickly ignore this requirement and then scramble to keep their accounts together when they are raising or acquired.
Single-entry system of bookkeeping
The single-entry system of bookkeeping is a basic system to record daily receipts or generate a weekly or daily report of a company’s cash flow. In the single-entry system of bookkeeping, the bookkeeper records one entry for each financial transaction or activity.
The single-entry system of bookkeeping involves recording only one side of the transaction or activity. It maintains only the purchases, cash receipts and payments and sales. It is used mainly by small businesses, which have minimal transactions.
Double-entry system of bookkeeping
The double-entry system of bookkeeping records a double entry for each financial activity or transaction. The double entry system provides balances and checks as it records the corresponding credit entry for every debit entry. It is not cash-based, and the transactions are entered when revenue is earned, or debt is incurred.
The double-entry system of bookkeeping is based on the duality concept, i.e. every financial transaction affects two accounts. It means that every debit entry to an account has a corresponding credit entry in another account and vice versa. This system is universally adopted and is considered accurate for recording business/financial transactions.
FAQS ABOUT Accounting And Book Keeping?
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