All businesses, whether they use the cash basis accounting method or the accrual accounting method, use double entry accounting to keep their books in order. Doing this increases the chance that your balance books, double-entry accounting gets this name because you enter into all transactions twice. If you would like to work as a professional bookkeeper then you should definitely know all about this method.
How bookkeepers Melbourne work
When it comes to double entry accounting, the fundamental formula for the balance sheet (Assets = Liabilities + Equity) plays an important role.
In order to adjust the balance of accounts in the accounting world, bookkeepers use a combination of debits and credits. You can think of a debt as a subtraction because you have discovered that the debts usually mean a decrease in your bank balance. And, you’ve probably found unexpected credits in your bank account or credit card that means more money has been added in your favor. Now forget what you have learned about debits or credits. In accounting, their meanings are not so simple.
Business owners who need to control their liabilities and their assets may find that double entry accounting offers more advantages than responding individual item, especially when they have a very complex task that must handle a large volume of transactions. Double entry bookkeeping allows you to prepare the financial statements directly from your books and accurately calculate the results. Also, this method of accounting easy to find and avoid mistakes, theft and embezzlement. Professionals from bookkeeperco.com.au are quite used to this method and could also help you understand more.
But what is this method after all?
Dual entry accounting is a method of accounting done by bookkeepers that is used to establish a set of books (credits and debits) that are used to prepare income statements. Bookkeepers record each transaction as much as a debit and credit card. Entries in the credit column represent the source of payments and debits corresponding to the use of the funds. In short, double entry accounting provides companies with a detailed description of the expenses, payment and benefits associated with each item sold or service rendered.
The “T” concept
Many bookkeepers around the world refer to double entry accounting accounts “T accounts”. This is because the document template resembles the uppercase letter “T”, which are two columns. Each is marked above the “T” on both sides of the vertical line. The left side is where transactions are recorded as “debits” while the transactions on the right are called “credits.” Essentially, the “T” received paper funds and delivered to all individual transactions.
If you need help count with bookkeeperco.com.au
The rule of thumb in double entry accounting is that each debt must have equal and opposite credit in order to balance the accounts. For example, if a service or a product sells for $ 1,200, then you must enter the book as a debit card, but to balance precisely, it is imperative that the transaction will also be recorded as a credit for the payment received. Before modern technology existed regarding accounting, keeping precise accounting books and hand, requiring great control and endless attention to details. Current accounting programs do not allow you to enter a credit amount without the corresponding counterpart in the debit and vice versa in order to minimize the errors. If you are unsure on how to work on this make sure you have the help of bookkeeperco.com.au.…Read More