Book-keeping system:
Book keeping is the art of recording monetary
transactions in the books of account in a proper manner. It primarily focuses
on the recording aspect of the transactions.
1. Single entry system:
A
system in which we do not record both aspects of the transactions i.e. debit
and credit. It is normally used by the small businesses who keep the incomplete
record of the transactions.
Feature of single entry system:
1. Oldest
system of recording.
2. Simple
and easy.
3. No
professional Knowledge is required.
4. No
definite methods or principles.
5. Suitable
for small business.
6. No
complete record of all transaction
7. Not
acceptable by the audit and tax authorities.
8. Income
or loss is calculated by increase or decrease in assets and liabilities over a
period.
2. Double entry system:
It is a system of accounting in which both
debit and credit aspects of the transactions are recorded. This is a true form
of accounting where complete information of the accounting records is
available.
Features of double entry system:
Ø Record
both aspects of every transaction.
Ø Trial
balance can be drawn to prove accuracy of record.
Ø Profit
and loss account can be prepared to know net result of business.
Ø Balance
Sheet can prepare.
Objectives
of Book-keeping:
Ø It
must provide a permanent and systematic record of all business transaction.
Ø The
periodical results as to profits or loss should be readily and accurately
ascertainable.
Ø To
enable financial data to be supplied for management of the business.
Ø To
ascertain the combined effect of all the transaction made during an accounting
period upon the financial position of the business.
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