Basic understanding of double-entry bookkeeping services
The accounting industry has grown somewhat and contains some technical words, but somehow these words are largely ignored by people. Sometimes some large and developed sectors like the banking industry do not know this word and “double-entry bookkeeping” is one of them. Even some accounting and bookkeeping experts are also not aware of this particular method of accounting.
Double-entry bookkeeping is a simple method by which every transaction is recorded by entries in two or more accounts, and according to this method, the total of the debit side (Dr) is equal to the total of the credit side (Cr). In general, the account which usually attracts debit and which usually attracts credit is sometimes confusing.
The simple way to understand double-entry bookkeeping is to understand that every financial transaction has a double effect. Typically, medium-sized and larger businesses use a double-entry system to record business transactions. Double-entry bookkeeping thus develops from the fact that each transaction has a double effect.
The difference between accounting services and bookkeeping may be unclear to the unskilled, while both have similar implications for financial success. Bookkeeping is an important part of the accounting function and it is necessary for any business organization to record financial transactions.
Basically, double-entry bookkeeping works on the principle that assets are a summary of liabilities and equity. For the accounts to remain balanced, a change in one account must match a change in another account. These changes are known as debits and credits. Debit and credit are interrelated; when one account is debited, another related account is credited. Assets and receivables are reported as debits, while liabilities and obligations are treated as credits.
The function of the accountant is to record the primary documents such as sales invoices and purchase invoices in the financial books. Cash and bank records must also be entered.
Main points of double-entry bookkeeping:
o A debit or credit will increase or decrease the account balance… depending on the type of account you are working with.
o For every increase in one account there is an equal decrease in another account.
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