Double Entry
Double EntrySynopsis
This essay explore the definition of the term �Double Entry accounting�, its processes and procedures. I will examine the five step of the double entry method in detail, and will compare and contrast this method to that of single entry accounting. The analysis concludes that with a discussion of the advantages of Double Entry and the reasons why this method has survived for so long. After complete this
�Like most good ideas, the idea behind the double entry method is very simple. Describe the double entry method identify its advantages, and explain why the methods has survived so long�
Double entry is an accounting methodology used to make sure that all accounts are properly balanced. This is a rather simplistic description of this system of bookkeeping. Accounting and Bookkeeping is the process of identifying, measuring, recording and communicating economic information about an organization. Bookkeeping encompasses the record-keeping aspect of accounting and therefore provides much of the data to which accounting principles are applied in the preparation of financial statements and other financial information. In this essay I will describe the double entry method, identify the advantages and why this method has survived so long.
The double entry accounting system provides a basic framework for the analysis of business activities. I am going to go further detail about the accounting procedures used to account for the operations of a business during a specific period. The transaction is analysed and processed in five steps. (See Appendix 1) These steps in the accounting cycle enable the accountant to combine and summarise the net results of many business activities into relatively concise financial reports.
Step one, The transactions are analysed from source documents. Source documents are printed or written forms that generated when the firm engage in business transactions.
Step two, Recording a transaction in a journal in this system the financial of an organisation is analysed as a consisting of many interrelated aspects, each of which is called an account Every transaction is identified by two aspects which is referred to as Debit , on the left side and credit on the right side.
Debit Credit
Each of these two aspects has its own effect on the financial structures depending on their nature. The certain accounts are increased with debits and decreased with credit and other accounts are increased with credits and decreased with debit. For example, the purchase of merchandise for cash increase the merchandise account...
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