| A Simple Definition of Bookkeeping | | | | The end result would be, that by entering the same |
| In very simple and basic terms, it can be said that | | | | piece of data twice, once as a Debit and once as a |
| Bookkeeping is the recording of your company's | | | | Credit, the accounts therefore balances and leaves a |
| Income and Expenses into a set of account books | | | | balance of zero (0), when the total Debits and total |
| known as Ledgers (read section on Ledgers to know | | | | Credits are deducted from each other. |
| more on Ledgers), Income and Expenses are also | | | | For example, if you receive a payment of $100 for a |
| known as Receipts and Payments, Inflows and | | | | Cash Sale, you would Debit the Cash or Bank |
| Outflows, Revenues and Expenditures, depending on | | | | Account and Credit the Sales Account, with the $100. |
| the accepted terminology used by your company, | | | | So when you prepare your Trial Balance, your Cash |
| industry or trade. | | | | Account balance would have a Debit balance of $100 |
| The Double Entry System | | | | and your Sales Account balance would have a Credit |
| The basis of a good bookkeeping practice is The | | | | balance of $100, meaning your Trial Balance balances. |
| Double Entry System. | | | | Why Double Entry and not Single Entry? |
| Many non-accountants and non-bookkeepers, these | | | | Of course, some may argue that a Single Entry |
| are people who are normally unfamiliar with | | | | System is easier to use, since you only need to enter |
| bookkeeping and accounting principles, get lost in their | | | | the data or information once. |
| bookkeeping from the very start, by not fully | | | | But what has to be noted, is that a double entry |
| understanding Double Entry. | | | | system gives an automatic check and balance and |
| What is meant by Double Entry? | | | | therefore will alert you of any errors and/or omissions |
| Simply put, Double Entry is to enter each piece of data, | | | | that may have occurred in your bookkeeping. |
| transaction or information twice (double) into your | | | | A single entry system will not allow you this check and |
| ledgers. | | | | balance. |
| Whether the data, transaction or information isa sales | | | | So I will only discuss about The Double Entry System |
| invoice, a receipt issued for a payment received or a | | | | and will ignore the Single Entry System. |
| payment voucher for a payment made. All these data | | | | In the next article, I will write on Debit and Credit. |
| will be entered once as a Debit and once as a Credit. | | | | |