Accounting & Book-keeping
Accounting is the systematic process of recording, analysing, and interpreting the financial transactions. It is the responsibility of every business – whether large or small to furnish their accounting records to the Income Tax Department.
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Highlights Of GST Registration
- The basic purpose of bookkeeping is
to identify, measure, and record
- The data provided by bookkeeping is
insufficient for management to make
- Accounting is the process of analysing, evaluating,
and conveying financial transactions that have
been recorded in a ledger account.
- Management can make key company decisions
based on the data provided by the accountants.
Types of Bookkeeping System
Single-entry bookkeeping and double-entry bookkeeping are the two types of bookkeeping systems
that are used to record commercial transactions.
Single-Entry Bookkeeping System:
- It allows you to keep track of all of your financial transactions in one place. For small enterprises with little or no transactions, a bookkeeping system is often employed. It is frequently described as a straightforward, practical, and informal method of recording.
- It usually keeps track of only cash disbursements, cash receives, sales, and purchases. All other accounting records, such as inventory, equipment, capital, and so on, are solely kept in memorandum or notes format.
- A daily summary of cash receipts, as well as a monthly summary of cash receipts and disbursements, which reflect revenue and expense, are the books or records kept in a single-entry accounting system.
- In contrast to the double-entry bookkeeping system, where one transaction impacts two accounts, a transaction in the single-entry bookkeeping system affects only one account.
- A cash sale, for example, is solely recorded as a rise in cash receipts or deposits, with no sales account.
- However, because it lacks a formal recording system, the simplicity of a single-entry bookkeeping system makes it more subject to error and incompleteness than a double-entry accounting system.
- Although it is an appropriate technique of record keeping for tax reasons for small and basic firms, it may not provide a reasonable valuation of a business’s key financial information.
Double-Entry Bookkeeping System:
- The standard technique of record keeping used by most organisations, bookkeepers, and accountants is the double-entry bookkeeping system.
- Management can make key company decisions based on the data provided by the accountants.
- The technique for double-entry bookkeeping is more extensive and complex than the procedure for single-entry bookkeeping.
- It introduces the concept of debit and credit, which states that for every transaction, something is received (debit) and something is given up (credit), and that each transaction affects two or more accounts.
- The advantage of a double-entry bookkeeping system is that it has a mechanism in place to ensure that business transactions are accurately and completely recorded.
- It is a dependable source of financial data and a fair assessment of a company’s status or performance.