At the first look, it seems single entry is very easy way to record your financial transactions but single entry has many disadvantage. double entry has strong structure and protect you from some basic mistakes in balance sheets so learning and practice double entry principle is recommended to have a perfect double entry accounting for your business.
what is Double Entry Accounting
To understand it, it's enough to pay attention to word "Double". so you will see two columns for each row of voucher. in single entry you need only record amount in on column as name: "Amount" but in double entry you have two columns as names: "Debit" and "Credit".
Double Entry System
Basically, this type of entry system has been invented by Luca Pacioli but it has been improved by accountants in pass of times. Nowadays we have a modern double entry systems in accounts departments with advanced accounting software so it could generate very useful reports and statements.
What is Double Entry Bookkeeping
When you listen about double entry, it seems that you should waste too much times everyday for recording financial transactions but with modern accounting software, actually you enter a single amount of any voucher and the accounting program will adjust double entry exactly in journal book. by Hand a double entry journal will takes a much time but with accounting software it is very fast and accurate. so why we should know about double entry if accounting software will it for us? It is a hot question !. usually operator and bookkeepers don't need it and it will do by software automatically but auditors need to know about double entry systems to help themselves to find mistakes in non-balanced sheets.
Double Entry Bookkeeping Examples
Here we show you some examples of double entry accounting from a mobile shop:
- Receive 2200$ from client: Jack Smith
- Pay 25$ for Telephone bill of office
- Buy some food for staffs as amount of 45$
- Purchase 11 New mobiles, each mobile 260$
- Sell one mobile of above models for 370$ for cash
- Sell 5 mobiles of above models for 310$ to Jack Smith
Note: We did these example by iGreen Accounting Software
Receive 2200$ from client: Jack Smith
Purchase 11 New mobiles, each mobile 260$
Pay 25$ for Telephone bill of office
Sell one mobile of above models for 370$ for cash
Buy some food for staffs as amount of 45$
Sell 5 mobiles of above models for 310$ to Jack Smith