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Wahid's Appraised - variation between Single entry and Double entry system of book keeping'
Introduction: I believed that in this article to study learners, & readers can gain superfluous awareness about what Bookkeeping is.? Single entry and double entry system of book keeping and the flow of revenue or money in businesses and organizations. Professionals affianced in this line of work have a variety of titles, duties and responsibilities.
What is bookkeeping?
Every business, even sole proprietorships, needs to keep track of sales, expenses and profits. To do this, a bookkeeping or record keeping system must be in place to ensure accurate financial data.
Bookkeeping, commonly referred to as keeping the books, is the process of keeping full, accurate, up-to-date business records. Proper bookkeeping can help businesses effectively manage cash flow, stay abreast of profits and losses, and develop plans for the future based on financial trends. In bookkeeping, books or general ledgers are utilized to records sales, cost of sales, expenses, job costing journal entries, and other financial data such as cash in bank.
In shortly -The systematic recording of a company's financial transactions. The two most common bookkeeping methods are single-entry and double-entry.
In addition to having excellent general math skills and being very detail-oriented, bookkeepers are required to be excellent communicators too. Bookkeepers are the financial spokesperson for a business and interact with many people both inside and outside the business. Bookkeepers need to be able to write concisely and speak clearly.
Major difference between Single entry and Double entry system of book keeping.
The important part in this article is ‘difference between Single entry and Double entry system of book keeping' I would like to interpretation my view on the explanation about the Single entry and Double entry system of book keeping before going into the main part of this article ‘difference between Single entry and Double entry system of book keeping' I have tried to make clear all the related parts bookkeeping system ahead of the ‘difference between Single entry and Double entry system of book keeping' because I believe that the people who are related with accounts, finance, auditing and also the business owners will understand overall about the foundations of bookkeeping
Definition" double entry" system
Double entry is an accounting technique, the double entry theory of bookkeeping can be defined as the system of recording transactions having two basic parts - one involving the receiving of a benefit and the other to giving the benefit - that's mean each transaction are involve in two side, during the method that two side or both side is recorded in book this call a "double entry" system
In this theory, as the two fold aspects of each transaction are recorded, the name "double entry" has been given to this system. Every transaction involves two fold aspects. An aspect of receiving and an aspect of giving. One who receives is a debtor (Dr) and one who gives is a creditor (Cr).
In the accounting technique, that distinguishes the dual character (source and disposition) of every financial business deal articulated by the central accounting equation (Assets = Liabilities + Owners' Equity). In this method, every business deal is entered double in the account books first, to record a change in the assets' side (called a 'debit') and, second, to parallel that change in the equities' side (called a 'credit'). If all entries are recorded accurately, the account books will 'balance' as the total of debit entries will equal the total of credit entries. Under the double entry method
Definition" Single entry" system
Single entry system is a system of book-keeping in which each and every transaction are recorded as a single entry, Under this system of book keeping, commonly a cash book and books to record personal accounts are only maintained. It is not actually a system of accounting because under this system there may be no record of the some of the transactions and only partial record of some others.
As such, single entry system of book-keeping is not perfect and frauds and mistakes can hardly be detected. Single entry accounting tends to be suitable only for small entities with limited transactions.
What is generally accepted accounting standards (GAAP)
"GAAP" is a short form that stands for Generally Accepted Accounting Principles. GAAP is a structure of accounting an extensively accepted set of rules, conventions, values, and procedures for reporting financial information, as reputable by the Financial Accounting Standards Board. GAAP rules and events are what administer corporate accountants when they present the particulars of a company's financial operations. These details can be found in such places as periodical balance sheets or income statements.
The SEC necessitates companies to settle their non-GAAP financial events with the closest similar GAAP measure. As they can vary extensively from firm to firm, non-GAAP calculations do not constantly provide an apples-to-apples evaluation. For this reason, these different measures are not meant to replace GAAP, but should instead be used in coincidence with it.
In further: GAAP (pronounced "gap") stands for "generally accepted accounting principles," a compilation of frequently followed accounting rules and standards for financial reporting. GAAP stipulation includes definitions of concepts and principles, as well as industry-specific rules. The purpose of GAAP is to ensure that financial reporting is transparent and consistent from one organization to another.
What is government accounting?
Government accounting is the authorizing, tracking and recording of revenue and expenditures. It can govern how taxes are raised and how the executive of a government spends the proceeds.
The common fund is the major in service fund of the city. The currency in this fund normally can be used for any lawful purpose. For most cities there are very few things that the General Fund cannot spend its money on. One confusing issue in civic accounting is the two different appearances used for the governmental funds – generally accepted accounting principles (GAAP) and budgetary method. The GAAP rules apply to all local, county and state governments. Budgetary method rules differ from state to state and city to city and do not constantly include all items of revenues and expenditures. The budgetary statements only serve one purpose – to show compliance with the state's budgetary statutes. The budgetary statements are not always a dependable report of what actually occurred. Therefore, the budgetary presentation will only be used when discussing the budgets. The GAAP presentation will be used for all other purposes.
Difference between Single entry and Double entry system:
01. In Single Entry method Cash / Bank dealings mentioned in same column but double entry dealings mentioned in alienated by Cash & Bank column.
02. Single entry system use only Debit or Credit only. If the payment made there is only one- one debit only but Double entry system way for every Debit there is opposite Credit also there.
Case: cash payment made some one
debit for party at the same time credit to Cash.
Single Entry is an unfinished record of book keeping but Double Entry is a complete record of book keeping.
03. Single Entry Bookkeeping
Particular entry bookkeeping commonly requires one general ledger everywhere all business dealings are recorded. A single entry general ledger might include journal entries as bellows':
Date / particulars / Amount / Total Balance
12/21 / Beginning Balance - $2,000 / $2,000
12/22 / Paint House - $500 / $2,500
12/23 / Bought Paint – ($200) / $2,300
12/24 / Paid Insurance – ($100) / $2,200
12/25 / Deposit - $500 / $2,700
Think of single entry bookkeeping like a checkbook register where all checks written decrease balance and all deposits raise balance.
Single Entry Bookkeeping
Double entry bookkeeping, on the other hand is more difficult. It involves influential which accounts your dealings should be posted to and can involve more than one ledger, journal, and even schedules. An example of double entry journal bookkeeping would look like following:
Date / particulars / Debit / Credit
12/21 / Paint House > 400 / Credit of $500
12/22 / Cash in Bank > 100 / Debit of $500
12/23 / Bought Paint > 110 / Debit Paint Inventory $300
12/24 / Accounts Payable > 201 / Credit of $300
12/25 / Check 1001 to Pay Ins. > 100 / Credit to Cash in Bank
12/26 / Paid Insurance /> 300 / Debit to Insurance Expense
04. Double Entry System and Double Account are not differing in the vital character. They only are different in the way the in sequence is accessible. What is obtainable in Double entry method as profit and loss account is accessible in Double account method as Revenue account, Profit and Loss misappropriation account as Net proceeds account and what is called Balance sheet is segregated into General balance sheet and Receipts and Expenditure on capital account. The dissimilarity in the appearance is also due to the actuality that the two systems of accounting provide differing purposes. Double entry seats importance on the Profits and losses and fallout of operations while Double account seats importance on whether sufficient requirements are made and whether funds are enough.
05. Typically compared to single entry book keeping system double entry book keeping system is used in large organizations where more cash is dealt with. The thumb rule for double entry bookkeeping is that at least two accounts gets exaggerated where one account is debited and the other is credited for each operation taking place. Suppose when an organization receives revenue in an account named "X" the amount is credited in the account "X". If paid in cash it is "debited" from the "Cash Account" or the amount is yet to payee it is debited from "Accounts Receivable".
Conclusion: When evaluating single entry vs. double entry bookkeeping, we should judge the type of business. A small sole proprietorship may not involve and proceed or double entry bookkeeping system such as a domestic business. On the other hand, if we write many checks, have more than one bank account along with lots of accounts receivable and payables, we may want to judge exploiting the double entry bookkeeping system. as a final point, when allowing for bookkeeping systems for our business there are many accounting software solutions obtainable. Some are great for the double entry bookkeeping, double entry bookkeeping system is good for the very small large business.
About the Author
MHOHAMMAD WAHID ABDULLAH KHAN
S/O MOHAMMAD SAADULLAH KHAN
Mr. Mohammad Wahid Abdullah Khan is the Project director of "Max Textiles Ltd".Mr. Wahid has been in accounting field since 1999. Prior to that he had completed over ten (10) years in various fields of Business like - Accounts, Finance, Internal & External Audit, project budgeting and project costing related positions in some of the largest group companies & the join venture companies in Bangladesh.
He consults about small- medium business owners and services professionals, business consulting service and project process. He is most experience in Financial Risk Assessment, Financial analysis, Financial Advising and Project Cost Analysis. He has published more than 100 articles & case study in different international journals. Such as Business, finance, personal finance, international finance, auditing, Risk assessment topic and performance & industrial related,
Mr. khan's most popular articles is "WAK" Model - The way of best solution for an organization internal audit process,( 1st,2nd,& 3rd part) "WAK" Model"- for successful financial resource , "Wahid khan"- cost analysis,Wahid theory – the key of dynamic series for successful financial consulting, Wahid techniques – the Significance and dependability manner for Performance audit(1st,2nd,& 3rd part) Wahid's Opinion - non-conformity among the performance audit and financial audit,Wahid's view- The cogent task and the confront of financial/economic analysis in the modern business decision making , Wahid's outlook- The Business Financial Analysis Should Be Included several required Documents with the analysis report or plan, WAHID'S JUDGMENT- difference strategic plan as opposed to an operational plan ,WAHID'S METHOD– the charismatic and fruitful guideline for financial investment decision making ,WAHID'S MEASURE - the influential and evaluated of similarity between profit & non- profit business planning
& Wahid's philosophy- The examined & careful consideration of strategic planning against business planning, PPBS MODEL,
he has consulted with more than 25 service & product companies, in recent years Mr. khan has been spending most of his professional time for financial consulting , Mr. Wahid is the owner of "WAM" Associates and "WAK" business solutions;
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