Maybe beginners in the accounting world will ask why you should use a double bookkeeping system to make financial statements rather than a single bookkeeping system. There are important reasons for the double accounting system which has been used for more than 500 years. In essence, there are two benefits of a double accounting system in accounting. Additionally, if you need to hire a professional accountant to help your business, we suggest you contact the most trusted Irenas Bookkeeping Service parramatta.
First, the double bookkeeping system displays more complete financial transactions.
Many financial transactions do not affect cash at all or do not affect directly. For example, selling an item on credit will increase the number of receivables and reduce the amount of inventory, while cash will increase later when the item is paid for. If only based on bank account records, of course, they will lose a clear picture of the transaction.
Second, financial transaction records are more accurate.
The double-entry accounting system has two balances on two different sides for each transaction, namely as a debit and a credit. If at the end of the year an imbalance or imbalance is found between debit and credit, the error lies in the basic accounting or balance sheet equation.
With a single entry accounting system, it only contains records of cash outflows and entry and recording of fixed assets with a separate column.
Myth in Double Bookkeeping
Is the double bookkeeping system more complicated? Of course not! Maybe at first for people who do not really understand accounting, it will look complicated. Initially only write the name of the transaction with a certain nominal, in double bookkeeping must balance debit and credit.
If you already understand and know how to interpret financial statements, this will make it easier to predict future activities and business plans. No need to worry anymore because there is now a computer program about accounting that will automatically correct errors in recording. All that needs to be done is to write down transactions such as purchases of office equipment, then enter proof of transactions in the form of soft files, debits and credits will be filled in automatically.