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| *Ostroff, Fair and Company>>>Technology |
TELL ME IN SIMPLE WORDS WHAT IS SINGLE AND DOUBLE ENTRY (i am talking about accounting subject)!!!!!!!!? |
pls explain me in simple word what is it...!!!!!!!!!!!!!!!!!!!!!!!1 Single entry is a journal entry to a single account only. While a Double entry is a journal entry to two accounts or more. Meaning there is a debit and a corresponding credit. And the total of the debits should equal the total of credits. If I'm not mistaken, we no longer use single entry bookkeeping. Accounting is simple to understand once you are doing it, but not so simple to explain, or do the forensics to figure out when something is messed up. This is a concept of General Ledger, which is a topic of somewhat advanced Accounting. Simple rule of thumb ... anything you do accounting for what happens in a company, there is a SINGLE ENTRY whatever happened ... inventory value got adjusted, products arrived or left then the totals of these single entries get posted to DOUBLE ENTRY book keeping of General Ledger, which keeps totals of expenses, assets, liabilities, income Every activity has two impacts. Recieve Inventory? That's an increase in the value of what you have, with an equal and opposite entry to total of what you owe someone for the value received. Ship product to a customer? We just subtracted from inventory, with opposite entry to cost of sales. Bill customer for the shipment? We just added to accoutns receiviable, with opposite entry to total sales. These opposite entries to every activity are called DOUBLE ENTRIES In any business, there is * Accounts Payable ... bills that we owe for products and services aquired ** In General Ledger there will be a grand total of what we owe, due to bills received but not yet paid, and there will be a grand total of what we have a fiduciary reponsibility to pay because of products and services recieved that we ordered, but not yet got the bill for Now when we get an invoice from a vendor ... we make a SINGLE ENTRY to the Payables showing what bill we got, and for what this was, and how soon it must be paid, like 30 days, 90 days etc. Because of this activity, there is also DOUBLE ENTRY to General Ledger. The account showing the fiduciary responsibility to pay, is reduced by the amount that is increased in the total of what we owe. Every accounting action has a double entry into the General Ledger, because the grand total entries to assets of value must equal the grand total entries to liabilities and expenses. The difference between the two grand totals is profit or loss. * What I just explained about Payables ... same kind of deal in reverse for Accounts Receivable where other people owe you for some product or service you sent them. |
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