Every Thing About Double Entry Bookkeeping

1. Everything About Double Entry Bookkeeping Bookkeeping and accounting are critical to the success of any business. Both processes ensure that you are on top of your finances and are able to make informed decisions regarding your business’s future. Companies usually hire bookkeepers as well as accountants to handle the financial matters of a business. The task of the bookkeeper is to simply record and organize the receipts and keep track of invoices and bills. It is the duty of the accountants to make sense of the data collected and organized by the bookkeepers. They turn the raw data into business reports which are then used to determine the company’s financial standing. There are various concepts used by bookkeepers and accountants to perform their jobs correctly. One of these concepts is double entry bookkeeping.

2. How Double Entry Bookkeeping Works Double entry bookkeeping is one of the fundamental methods of recording business entries. It basically means that every transaction has to be entered in two different accounts. For instance, if the company is making a sale then the transaction would be debited to both the company’s cash account as well as to its revenue account. On the flip side, whenever the company borrows an amount from the bank, the amount is to be entered into the cash account of the company and also credited to the company’s accounts payable. In double entry bookkeeping, no matter what transaction is entered, the assets of the company always equate to its liabilities plus equity. Here, assets of the company are the cash account while the liabilities and equity are the accounts payable and revenue account respectively. Benefits of Using Double Entry Bookkeeping There are various benefits that double entry bookkeeping offers to bookkeepers. For starters, it makes it a lot easier for you to locate data entry mistakes. Since the transactions are being recorded in two different accounts, any mistakes made during entry will become evident when the assets don’t equate to the equity and liabilities of the company. Moreover, it also provides a comprehensive record of all the transactions made by the business and their relative impact on the business’s financial standing. Shoebox Bookkeeping offers online bookkeeping services to businesses all over Australia. Give us a call if you want to try out bookkeeping services for your business.