DOUBLE ENTRY ACCOUNTING

Accounting being an indispensible part to every business corporation, this practice has become a supportive function to compete in the competitive market. To judge your firm’s present financial position for any company, it is necessary that your firm carried out accounting process. Accounting will assist you to record and classify each single income and expense incurred in your business and will ascertain you with profit and loss. But to reflect your business’ correct income or losses, it is necessary that your accounting track all the information in a systematic way.

Every business corporate follows accounting procedures and standards which are framed by accounting Boards under the GAAP (Generally Accepted accounting Principles). Accounting is not a new concept in the market, it is been in existence for approx. more than 500 years and so old is the way in which it is carried on.  From the accounting standards and policies which are laid down the GAAP, one is foremost important way for carrying your accounting process very well. And that is by Double Entry rule system in Accounting.

The whole accounting depends on one fundamental Equation, that is,

Assets = (Liabilities + Owner's Equity)

According to above written equation, it is important that the both side in equation stay balanced. These balanced sides will automatically reflect accuracy in your financial statements. And to accomplish this balanced equation, it is vital that your financial transactions must be entered into books of accounts by following their two fold effects on accounts. Above same format is followed while preparing balance sheet for the concern.

 “For Every Single Debit, There Must Equal Credit.”

This rule for debit and credit reflects the actual dual aspect of accounting. Double entry accounting states that, every financial transaction will give its impact minimum on two or more than two accounts of a firm. If a financial transaction has a debit account, it is for sure that it will also have a credit side two. Every transaction is recorded in the books of account, with a view that it will affect your two or more accounts simultaneously in form of debit or credit. This rule of accounting facilitates you to record monetary transaction is well systematic manner.

The double entry system mainly has its effect and enables the company to show their charts of accounts. It has a list of all the active accounts, which are in used to record the transactions, by a business corporate.

Here listed few of major benefits that can be drive while following the double entry rule for you accounting, by a firm:

• Double entry accounting completes your accounting process. It ensures that the business aspect of every single transaction is been posted.
• This method supports you with higher arithmetical accuracy while recording monetary transactions.
• Dual aspect Accounting will ascertain you with correct profit or loss incurred by your firm with in specified time period, in way to record every income and expense reflected in profit and loss account.
• Two fold effect is also been reflected in balance, which reflects firm’s financial position. By making both the sides of balance sheet equivalent, the double entry rule system completes here.
• As accounting done with double entry system, the results will be exceptionally accurate and correct in terms of their reliability. Hence, they are better accessible for taking immediate decisions and even for planning future course of action of business.
• You can keep better control over your business financial transactions. Moreover, your costs can be controlled in an effective way.
• Dual aspect of accounting will facilitate to keep a proper record over your receivables and payables and get know about your cash flows within no time.

Accounting Software

Accounting software is designed with a few to minimize human efforts in recording and classifying the financial transactions. They will assist like your right hand in managing your business. Hence, the accounting softwares are designed with the in-built structure of Double entry system. This will help the accountant to record to keep automatic track record of inventory, payables, and receivables and even helpful in preparing your tax at the end of every financial year.

Accounting software will automatically set up charts of accounts as per your business needs. And give you the opportunity to generate varied types of financial reports like balance sheet, income statement, and statement of cash flows, to view your business progress. Even accounting system additionally displays a general ledger for every account, which is in use, showing credit and debit balances.

Bottom-Line

Double entry system used in accounting procedure is essential to higher accuracy and results and better checking of our accounts. It completes your accounting method by making both the side of balance sheet uniform. When your credit and debit balances will match, automatically your financials will ensure that you have exactly classified your every single transaction in the books of accounts by using Double entry system.

Accounting Outsource Hub works well and follows double entry accounting for your business. Tacitly, you don’t need to worry about the accuracy in your financial output. Outsource your accounting and bookkeeping services to us and let make us all your accounting procedure with higher correctness following general accounting procedures and standards. We ensure you, that our output in terms of our outsourcing services will be higher in quality.

To know more about, be free to Contact Us at any time.