When you start managing your own business, whether it is small or big, having an understanding of bookkeeping and concepts attached to it is very important. One of the most significant aspects of bookkeeping is deciding the accounting system to follow. Two options are available for this purpose, i.e., single entry, and double-entry bookkeeping. Both of them are a good option to keep detailed bookkeeping if your company and its monetary transactions.
Single Entry Bookkeeping System
A single-entry bookkeeping system works well if you own a small business or enterprise. In a small business, the transactions are small and simple, so there is not much difficulty. Through a single entry bookkeeping system, for every transaction made, a single entry is made in the record book. A lot of professionals consider it like maintain a simple journal where there are single entries, and it is easy to draw in the positives and negatives of a business. If you choose this system for your bookkeeping, you must maintain a ledger account with two columns for both revenue and expenses.
A single-entry bookkeeping system works like a personal cash record. It can help in maintaining cash, expenses, income, tax, cheques, and tax deductions. Through this system, an entity can also calculate the average income of their accounts. The only drawback with this system is that it is unable to calculate balance sheets, assets, and liabilities accounts.
Double-Entry Bookkeeping System
This entry method is very popular among people with outsized businesses and companies. Double-entry bookkeeping consists of two basic features. One of those features is that each transaction is made of two parts i.e., credit and debit. The second feature is the formation of two accounts for every transaction. A lot of business owners use this system of bookkeeping as an account payable, inventory or accounts receivable.
Bookkeeper Sunshine Coast is the perfect way to trace your accurate financial standing in the balance charts. You can also use this system to calculate precise rates of monthly profits and losses if you own a big company. Another biggest advantage of this system is that it prevents scams, frauds, and rip-offs by making accounts that are errorless. When compared to a single entry bookkeeping system, a double-entry can be used in more complex situations and require experts to maintain good records whether the client has a small or a large business.