Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, and payments by an individual or organisation. The persons who do this job are called bookkeepers. They use one of several methods, such as single-entry and double-entry bookkeeping. With proper bookkeeping, companies are able to track all information on its books to make key operating, investing, and financing decisions. Proper bookkeeping gives companies a reliable measure of their performance. It also provides information to make general strategic decisions and a benchmark for its revenue and income goals.
Single Entry BookkeepingEdit
- The single entry system of bookkeeping requires recording one entry for each financial activity or transaction.
- Single entry bookkeeping system is a basic system that a company might use to record daily receipts or generate a daily or weekly report of cash flow.
Double Entry BookkeepingEdit
- The double-entry system of bookkeeping requires a double entry for each financial transaction.
- The double entry system provides for checks and balances by recording a corresponding credit entry for each debit entry.
- The double-entry system of bookkeeping is not cash-based. Transactions are entered when a debt is incurred or revenue is earned.
- "What is Bookkeeping?". Corporate Finance Institute. Retrieved 2021-09-13.
- "Types of Bookkeeping System – Objectives and Methods | Tally Solutions". Tally. 2019-11-28. Retrieved 2021-09-13.