Easy Understanding of Bookkeeping - part 1

Easy Understanding of Bookkeeping - part 1
-- A Simple Definition of Bookkeeping --

In very simple and basic terms, it can be said that
Bookkeeping is the recording of your company's Income and
Expenses into a set of account books known as Ledgers (read
section on Ledgers to know more on Ledgers), Income and
Expenses are also known as Receipts and Payments, Inflows
and Outflows, Revenues and Expenditures, depending on the
accepted terminology used by your company, industry or
trade.

-- The Double Entry System

The basis of a good bookkeeping practice is The Double
Entry System. Many non-accountants and non-bookkeepers,
these are people who are normally unfamiliar with
bookkeeping and accounting principles, get lost in their
bookkeeping from the very start, by not fully understanding
Double Entry.

-- What is meant by Double Entry?

Simply put, Double Entry is to enter each piece of data,
transaction or information twice (double) into your ledgers.

Whether the data, transaction or information is a sales
invoice, a receipt issued for a payment received or a
payment voucher for a payment made.

All these data will be entered once as a Debit and once as
a Credit.

The end result would be, that by entering the same piece of
data twice, once as a Debit and once as a Credit, the
accounts therefore balances and leaves a balance of zero
(0), when the total Debits and total Credits are deducted
from each other.

For example, if you receive a payment of $100 for a Cash
Sale, you would Debit the Cash or Bank Account and Credit
the Sales Account, with the $100.

So when you prepare your Trial Balance (which will be
explained in my article on Final Accounts), your Cash
Account balance would have a Debit balance of $100 and your
Sales Account balance would have a Credit balance of $100,
meaning your Trial Balance balances.

-- Why Double Entry and not Single Entry?

Of course, some may argue that a Single Entry System is
easier to use, since you only need to enter the data or
information once.

But what has to be noted, is that a double entry system
gives an automatic check and balance and therefore will
alert you of any errors and/or omissions that may have
occurred in your bookkeeping.

A single entry system will not allow you this check and
balance.

So I will only discuss about The Double Entry System and
will ignore the Single Entry System.

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and since the late 90s I began merging all my expertise
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