WHAT IS DOUBLE ENTRY BOOKKEEPING AND HOW DOES IT WORK IN THE GENERAL LEDGER?

bookkeeping

Doubleentry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the equation Assets = Liabilities + Equity, in which each entry is recorded to maintain the relationship.

It’ѕ a сеnturіеѕ old ѕуѕtеm that still wоrkѕ (and іѕ thе gоld ѕtаndаrd) fоr keeping accurate financial records. But bесаuѕе оf QuісkBооkѕ and оthеr popular bооkkееріng ѕоftwаrе рrоgrаmѕ thаt hіdе the dоublе-еntrу rесоrdkееріng bеhіnd the ѕсеnеѕ, many small business оwnеrѕ аnd еvеn bооkkеереrѕ themselves аrе lеft ѕсrаtсhіng thеіr hеаdѕ аѕkіng.

So let’s ԛuісklу untangling thе bаѕісѕ оf how this classic bookkeeping ѕуѕtеm actually gets thе jоb dоnе.

In a nutshell, thе whole double-entry bookkeeping system іѕ based upon thе Accounting Eԛuаtіоn: Aѕѕеtѕ = Lіаbіlіtіеѕ + Equity. This is what mаkеѕ a Balance Sheet bаlаnсе, and is a wау tо аѕѕurе ассurасу. If аѕѕеtѕ dо nоt equal liabilities аnd еԛuіtу, it mеаnѕ thеrе іѕ аn еrrоr ѕоmеwhеrе іn the fіnаnсіаl rесоrdѕ.

Thеrеfоrе, whеn a journal еntrу is сrеаtеd to сарturе a trаnѕасtіоn іn thе fіnаnсіаl records, it іѕ entered twісе (hence, double-entry). It’s еntеrеd first as a dеbіt tо оnе account аnd аgаіn аѕ a сrеdіt tо another ассоunt.

Whаt are dеbіtѕ аnd сrеdіtѕ?

Evеrу General Lеdgеr account hаѕ twо ѕіdеѕ (аll ассоuntѕ used tо track fіnаnсіаl transactions in the Chart оf Aссоuntѕ = the Gеnеrаl Lеdgеr). The left side іѕ thе debit аnd thе rіght ѕіdе іѕ thе сrеdіt. Thіѕ never сhаngеѕ. But hоw thе dеbіt or credit еntrіеѕ аffесt thе bаlаnсе carried іn аn account–either increasing it оr decreasing іt–іѕ nоt аlwауѕ thе ѕаmе. That іѕ bесаuѕе thе tуре of ассоunt dеtеrmіnеѕ the ѕіdе оn whісh the bаlаnсе іѕ uѕuаllу саrrіеd. More details here.

There аrе 5 ассоunt types: аѕѕеt, lіаbіlіtу, іnсоmе, еxреnѕе, аnd equity.

Thе cardinal rule оf jоurnаl еntrіеѕ іѕ, for еvеrу dеbіt tо аn account, there muѕt be a сrеdіt оf еԛuаl vаluе to аnоthеr ассоunt. Sоmеtіmеѕ these dеbіtѕ аnd credits fоr a ѕіnglе trаnѕасtіоn аrе ѕрlіt uр among mоrе than twо ассоunt, but thе tоtаl dеbіtѕ аnd tоtаl credits must ALWAYS bаlаnсе.

If thеу dоn’t, іt mеаnѕ thе trаnѕасtіоn іѕ not еntеrеd соrrесtlу.

Sо, how dо уоu dеtеrmіnе whісh ассоunt іѕ tо bе dеbіtеd аnd which tо be сrеdіtеd?

Thеrе are two steps:

  • Determine which two (or mоrе) accounts аrе affected by thе trаnѕасtіоn
  • Create a journal еntrу to debit аnd сrеdіt thеѕе ассоuntѕ ассоrdіnglу

To accomplish ѕtер 2, you nееd to knоw whether a dеbіt оr a сrеdіt wіll іnсrеаѕе оr dесrеаѕе thе іnvоlvеd ассоuntѕ’ bаlаnсеѕ.

To knоw thаt, уоu nееd tо knоw whісh side оf each оf the five mаіn types оf gеnеrаl ledger ассоuntѕ carries the normal ассоunt balance, whеthеr the dеbіt ѕіdе оr thе credit side. Thе ѕhоrt аnѕwеr is, Aѕѕеt аnd Expense ассоuntѕ саrrу dеbіt bаlаnсеѕ, аnd Lіаbіlіtу, Eԛuіtу and Income ассоuntѕ саrrу сrеdіt bаlаnсеѕ.

Of соurѕе, іf уоu had a сhеаt ѕhееt tо kеер аll of thіѕ ѕtrаіght, уоu wоuldn’t have tо trу tо rеmеmbеr іt all іn your hеаd. Yоu’d have thе аnѕwеrѕ аt a glаnсе.

Find out more informations in  our post here: http://www.absoluteblissflowers.com/outsourcing-bookkeeping-activities-tasks/

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Outsourcing Bookkeeping Activities and Tasks

Outsourcing Bookkeeping Activities and Tasks

There are many outsourcing bookkeepers that you can hire for your business. And, most of these bookkeepers are offering different services. It is important for you to make sure that you are aware of all the activities and tasks the bookkeeper can do, before you hire anyone of them. The more tasks they offering, the more value for money you are going to get. Here are some of the tasks and services that most outsourcing companies are offering:

Bookkeeping

Of course, they are offering bookkeeping services to the business, meaning that they are ensuring that the books are updated at the end of the month. They are also ensuring that all important documents are saved and available for viewing by the owner of the business. for more information, visit :http://www.cpapracticeadvisor.com/news/12219049/survey-reveals-traits-of-growth-oriented-bookkeepers

Outsourcing Bookkeeping Activities and Tasks

There are many aspects of bookkeeping services that the bookkeepers offer. And, this is the one task that you need to look carefully at, before you hire them. If there are any mistakes in this part of their service, they are not going to deliver good quality work.click here for related information.

Income tax services

We all know that the one thing that every business owner hates, is when it is time for tax returns. This is also the time where a business owner is the busiest.

Luckily for those who are outsourcing their bookkeeping to an online bookkeeper, is that most of these bookkeepers are including this service with the tasks that they are doing. This is just simpler if the person handling all the financial aspects of the business and keeping the books updated, also doing the tax returns. This is because they know where everything is. But, there are some bookkeepers that are asking an additional fee for doing this service. This is why you should ensure about all the activities and tasks that are included in the fee of the bookkeeper.

Payroll services

One of the activities and tasks that a bookkeeper can offer, that can really make life easier for a business owner, is payroll services. This is where they handle the salaries and pay what your employees are entitled to at the end of the month.

The only problem with this service is the fact that not all the online bookkeepers are offering this service. Not every one of them has the right software and knowledge to do the payroll. But, if you can find a bookkeeper that has added this to their resume when you outsource your bookkeeping, it is a great bonus and you will save a lot of money. Some will ask for a small additional fee for the service, but it is well worth it.

It is essential to make sure about the activities and tasks that the bookkeeper is offering your business. The more services they are offering you, the more value for money you are going to get. These three activities and tasks are the three tasks that most of the bookkeepers in Melbourne is offering any business, but you should make sure that they don’t ask additional fees for these services.

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Bookkeeping Software Reviews: Review the Best Bookkeepers

Bookkeeping Software Reviews Review the Best Bookkeepers

When you are searching for bookkeepers, you are normally going to read reviews online to see if the bookkeeper can be trusted or not. However, if you don’t know what to look for in a review, you might end up reading a review that is untrustworthy. There are many reasons why you can’t trust a review. Here are more information about reading reviews, when you are choosing a bookkeeper for your business:

Paying to write a review

One of the most important things that you need to look for, is if the review of the bookkeeper in Melbourne that you are reading is a review that was paid for. It might be hard to see if someone was paid to write a review. That said,if you know what to look for, you will easily see when a review was paid for or if the review is even legit. for further details, visit :https://www.gov.uk/government/publications/record-keeping-and-simpler-income-tax-applicationssoftware

Bookkeeping Software Reviews Review the Best Bookkeepers

The first thing to look for are reports of some sort of problem with the company. It is important to read reviews that have pros and cons. A company without any problems and that is just positive, might be a warning sign that the writer got paid to write a positive review. The review should not be recommended to you too much or too often in the review.

Look for a rating

Looking at a review, before you start reading one, you should immediately see a rating. If you see a rating, normally the best is a 5-star rating, you can trust the review as a legit review. However, if you are reading a review on a review site, and there are for example 20 reviews of one bookkeeper, and all of them are a 5 stars, then you can know that this might not be a legit site for reviews. click here for related information.

Out of 20 reviews, there should always be one or two persons giving 4- or 3-star ratings. Not everyone can like a bookkeeper exactly the same, every time.

Reading more than one review

To be sure that you are really reading a review that’s legit, it is always best to read more than one review of the same bookkeeper. And, you should not use the same website for reading the reviews.

It might take a little longer, but if you are serious about finding the best bookkeeper, you should make the time to read as many reviews from different sites as possible. This is the only way to get a clear indication if a bookkeeper is legit and really as good as what the reviews are saying.

Everywhere we go, everyone is saying to read reviews before you hire a bookkeeper. However, it is important that you know that not all the reviews are really telling the truth. This is why it is essential to read more than one review of one specific bookkeeper. If all the reviews that you are reading are positive, then it might mean that the bookkeeper is legit and can be trusted. Then, you can start thinking about hiring a bookkeeper in Melbourne without worrying if it is legit or not.

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Cut Cost Margins with a Freelance Bookkeeper

Cut Cost Margins with a Freelance Bookkeeper

There are many people that are freelance bookkeepers in Melbourne that any business can use to maintain the business’s books. However, there are many businesses and companies that are still wondering if this is a good idea to use these freelancers. The one thing that they don’t realize is that you can cut costs by using a freelancer as the company’s bookkeeper. Here are some reasons how you can cut costs with hiring a freelancer instead of a permanent member of staff.

Don’t need to have the software

The first, and one of the most important reasons, why you will cut costs by hiring a freelance bookkeeper, is the fact that your business then doesn’t need to buy the best software for doing and maintaining the business’s books, which is often very expensive. for more details, visit :https://fiscalintegritygroup.com/freelance-bookkeeping-just-bookkeeping/

Cut Cost Margins with a Freelance Bookkeeper

The freelancer will come straight to your office and do the books from their computer. And, if you are using an online bookkeeper, they normally do everything online too, and again from their own computers and systems. You don’t need to buy the best software to manage the books correctly.

Cheaper than an in-house bookkeeper

Hiring a freelancer will be much cheaper than hiring an in-house bookkeeper. This is because an in-house bookkeeper is only working for you, and you need to make sure that they have the funds to be able to pay all their debts and to live without any financial problems. click here for related information.

However, if you’re using a freelance bookkeeper, you are not going to be their only client, and you don’t need to pay as much money for them. They are getting paid by everyone that they have a contract with. This makes it cheaper for your business and you can use the money for more important things.

Save money on errors made

If you or a bookkeeper has less experience but is doing the books of your business, there is a big chance that mistakes can be made. Mistakes that will cost the company money – sometimes considerable amounts. Even if it is only a couple of dollars, at the end of the day it can make a difference.

The good thing about a freelance bookkeeper is that they have all the experience and qualifications to prevent mistakes from happening in the first place, meaning that the business will not lose money in any way. And, when it is time for tax returns, the chances that the books will be in order and you getting tax refund back, is so much better. Even one mistake or error with the books can result in a huge loss, especially if you don’t have a good and trustworthy bookkeeper.

Bookkeepers are truly essential for any business. However, there are too many businesses that don’t use the best bookkeepers that they can find, because they are expensive. But, there are many reasons as to why hiring a freelance bookkeeper will in fact save money in the long run. These are the most common reasons why you can cut costs by hiring a freelance bookkeeper in Melbourne for your business or company.

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Looking for Trusted Bookkeepers for Your Bookkeeping Requirements?

Looking for Trusted Bookkeepers for Your Bookkeeping Requirements

There is nothing more important to make sure that you are looking for trustworthy bookkeepers like www.bookkeeperco.com.au for your bookkeeping requirements. It can be dangerous with many repercussions if you don’t take the time to hire the best and most trustworthy bookkeepers. Here are some ways about how you can start looking for trustworthy online bookkeepers for your company:

Ask other business owners

The first thing that you can do, is to ask other business owners that are outsourcing their bookkeeping to bookkeepers, which company they are using. They will be able to tell you the company that they are using, and if they can recommend them to you. for further details, visit :https://www.gov.uk/government/publications/keeping-records-for-business-what-you-need-to-know

Looking for Trusted Bookkeepers for Your Bookkeeping Requirements

There isnot reason why you can’t use the same company as other businesses. You should just make sure that they are giving you names that you really can trust and rely on. Don’t just believe the first business owner that you have asked.

Make sure the company is licensed and insured

Every bookkeeper should be licensed and has comprehensive insurance. Otherwise, it is going to be your problem when something gets stolen or if a disaster is destroying all your paperwork that the bookkeeper has with them. You have the right to ask them to see their license number and their insurance papers. click here for related information.

Reading reviews

When you have asked other business owners the company that they are using for their bookkeeping, you can take those names and research them online and read their online reviews. You will easily see if a company can be trusted or not when you are reading reviews about the online bookkeeper.

If you don’t find any reviews of a company, or you are just finding negative reviews of a certain bookkeeper, you should rather not use the company and start looking for another company that you can use. You can’t use a company that you don’t fully trust.

Doing interviews

You should also interview all the potential outsourcing bookkeeper’s companies that you are considering. During the interview, you can ask all relevant questions so that you are able to make the best possible decision for your business.

You should also ask about services that they are offering and the fees that they are asking. You don’t want to pay high fees for a company that doesn’t offer a great amount of services. There should be a balance between the fees that they are asking and the amount of services that they are offering. Most of these companies are asking one fee for all the different services that they offer. And, this is these companies that are the best value for money.

It is important to make sure that you know where and how to look for a trustworthy and legit bookkeeping company. This is the only way to make sure that you are using the best possible service that you can find. There are many bookkeepers out there that you can use, and it is important to make sure that you are using the right bookkeepers in Melbourne for your business requirements.

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