Double Entry Book-Keeping

Double Entry Book-Keeping
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Double entry book-keeping is a method by which small businesses keep track of all their accounts, and then pass them onto an accountant for processing into financial statements.

Double entry book-keeping is one of the most simplest accounting practices to grasp, yet it is also one of the most longest tasks to complete.

The basic logic is that all your basic business transactions are assigned a account name, either relating to a supplier/customer/bill.

You would under a manual double entry system have accounts book which has each individual account displayed on each page.

The page would be divided into two columns one for money flowing in, one with money flowing out.

The entire logic of double keeping is that as money enters one account it will come from another account. As shown by the spreadsheet example below:

You would use double entry book-keeping to track all of the transactions in your business.

Sales and Purchase Ledgers are very simple to grasp. The are essentially two books which follow the most of the principles of double entry book-keeping.

The Sales and Purchase Ledgers concentrate mainly on keeping track of Creditors and Debtors. Sales and Purchase Ledgers would normally be used in medium sized businesses who wish keep a track of what they owe and are owed.

Whilst the double entry book keeping method would be used by small businesses.

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