Double Entry Bookkeeping Software

Many people find that the subject of accounting is rather intimidating. The concept of double-entry accounting may appear to be particularly complicated, but in reality, it is one of the most effective and precise ways to keep track of the financial information pertaining to your company.

Before delving deeper into the process, the purpose of this blog article is to provide you with an introduction to double-entry bookkeeping by explaining what it is and how it operates so that you have a better grasp of the process overall. Let's get started!

People who are unfamiliar with the concept may find double-entry bookkeeping to be intimidating, despite the fact that it is not actually that difficult to understand or do.

This article will provide a concise introduction to double-entry accounting and describe how you can utilise the desktop version of QuickBooks Premier 2017 to get up and running with this method of bookkeeping in a way that is both speedy and uncomplicated.

You should have a decent concept about what what double-entry bookkeeping is by the time you reach the conclusion of this blog post. You should also have a good notion about how you might want to go about setting up the accounting records for your own business utilising QuickBooks Premier 2017.

You will need to make use of double-entry accounting software in order to maintain correct records of the financial dealings of your company. A significant number of companies employ a method of bookkeeping known as double-entry bookkeeping in order to monitor the flow of money into and out of the company. This procedure guarantees that the books of your firm are always up to date and accurate. Due to the comprehensive record-keeping system that is in place thanks to double-entry bookkeeping software, you will be able to immediately spot any errors that occur or anyone who attempts to pilfer funds from your business accounts in the event that they do occur.

Explaining Double-Entry Bookkeeping

With double-entry bookkeeping, you record two separate accounting entries for every single transaction that occurs in your company. However, why? Do they always come in pairs? And where exactly do the submissions end up? Let's analyse it in more detail.

The most fundamental truth of running a business is reflected in double-entry accounting in the form of the adage "you don't get anything for nothing." If anything new comes into your company, it's because you had to give up something else in order to make room for it.

You are required to recognise both parties involved in every transaction and document that information in your books. Therefore, this method of bookkeeping is known as double-entry bookkeeping since it requires the creation of an additional entry.

Are Two Entries Always Present?

The name "double-entry bookkeeping" comes from the fact that each transaction requires at least two separate entries in the ledger. It's possible there are more. A sale could consist, among other things:

• boost revenue
• reduced inventory
• impose a tax obligation on the GST that you have collected

And it has the potential to grow far larger than that. When a transaction is more complicated, there will be additional entries in the ledger.

Double-Entry Bookkeeping: How to Do It

The purpose of using double-entry bookkeeping is to ensure that all of the knock-on consequences of a business transaction are tracked and reflected in the accounts of the business. But what does that entail in terms of how things actually work?

To acquire a feel for it, you need to have some background knowledge on the following topics:

• how business accounts are structured
• where the chart of accounts should be placed, as well as
• what happens during a transaction

Double-Entry Bookkeeping Complete Guide

The double-entry bookkeeping system is one of the standard accounting methods that are utilised by both small and large businesses in the modern era. In point of fact, it has been used for over 500 years, and although it can be traced back to the merchants of Venice, it has not lost any of its relevance. This tutorial will offer you with all of the information you require regarding how it is utilised and why it performs effectively as an accounting system.

Every transaction will include at least two accounts, if not more, according to the principle that underpins double-entry bookkeeping, which states that this will always be the case. If a corporation, for instance, gets a loan, its cash account will increase with the funds from that loan; nevertheless, its liability account will also increase, and this will be shown in the account category known as loans payable.

When a corporation buys a print advertisement, for example, the cash balance in its cash account goes down while the amount of money in its expense account, which falls under the heading of advertising expense, goes up.

Because the primary goal is to constantly maintain a balance, the double-entry bookkeeping system is able to make use of something that is referred to as the accounting equation. This equation is something I like to refer to as "the financial compliance equation." The equation can be written as follows:

Assets equal liabilities plus the value of any owner equity.

Let's have a look at the equation in light of the previously given print advertisement as an example. Because of the cost of the advertisement, which is considered a liability, the owner's equity has decreased because cash was used to pay for the advertisement.

A further aspect of the concept of double-entry is the requirement that the sum of the amounts that are recorded as debits and those that are added as credits inside general ledger accounts must be equal.

In every one of these aspects, the overarching concept is that every transaction results in two impacts that need to be accounted for. This principle, which is also referred to as the Duality Principle, is at the heart of the concept.

According to this idea, it doesn't matter if a business spends money out of their own accounts as long as they obtain something in return, whether it be the advertisement itself or something else (e.g. office equipment, supplies).

An accounting system would only offer an extremely restricted view of how a company handles its money if it did not acknowledge that there is an asset gained for every spend.

Every transaction is recorded in a general ledger sheet or document, such as a balance sheet ledger account (representing the assets, liabilities, and equity components of the business) or an income statement ledger account (representing the business's income and expenses), which contains columns for recording debit entries and credit entries:

• When debit entries are made on the left side of a transaction, various effects are produced. These impacts include an increase in expenses or assets, as well as a decrease in income, equity, or liabilities.
• Other effects take place on the right side of a transaction, which is where the credit entry side is located. These effects include a reduction in expenses or assets, as well as an increase in income, equity, or liabilities.

Using the double-entry accounting system

In order to demonstrate what the implications of this theory are when applied to accounting in the actual world, the following instances of its use are provided:

• The purchase of a piece of equipment with cash would result in a debit being recorded for the equipment and a credit being recorded for the cash, which would lead to a reduction in the amount of assets held by the company.
• Receiving interest on money deposited into a business bank account would result in a debit for the cash received and an associated credit for finance income, which would represent a rise in income. This would mean that there would be a debit for the cash received and a credit for finance income.
• If you were to sell ordinary shares of your company in exchange for cash, the transaction would result in a debit for the cash that was received and would indicate an increase in assets. On the other hand, there would be a credit for the share capital, which would represent an increase in equity.
• A credit would be made to the bank loan account, which would reflect a rise in liabilities. A debit would be recorded for the amount of cash that was received, which would result in an increase in assets. Receiving principle from a bank loan would result in an increase in assets.
• The cost of paying the electric bill would be recorded as a debit under the category of utility expenses, which would lead to a rise in expense, while paying the bill would result in a credit being added to cash, which would lead to a reduction in assets.

Even though they are typically uncomplicated, these entries have the potential to become more difficult to understand when more than two accounts are involved.

Establishment and Typical Procedure for Double-Entry Accounting

When organising the financial records of a company, it is critical to first generate a comprehensive listing that is referred to as a chart of accounts. In most cases, accounting software will make recommendations for the kinds of accounts that are most frequently required by businesses.

After it has been set up, the chart of accounts is utilised as a point of reference whenever two or more accounts are chosen in order to record a transaction into the general ledger. This happens every time a transaction is entered into the general ledger.

Along the way, other accounts might be introduced to the chart of accounts, while some might be removed if it becomes clear that you won't ever make use of those particular accounts.

In most cases, the first entry consists of the account name and the amount that has to be subtracted from it.

The account and quantity that needs to be debited are shown on the following line, which is recessed so that it may be clearly recognised from the entry that is immediately adjacent to it. Every one of these entries in the journal is considered to be a generic journal entry.

This is done for you immediately as soon as you enter the amounts and select the account to which they should be credited thanks to the accounting software.

It is much preferable that accounting software can automatically produce these entries whenever a sales invoice or check is readied for printing. By employing software to manage routine chores such as invoicing and cost tracking, one can enhance accuracy while also saving time by using the programme.

Additional Benefits of Double-Entry Bookkeeping

Keeping your books with double entries offers a number of benefits to consider. This includes the capacity to spot errors in mathematical calculations and the advantage of possessing precise financial information that provides insights into a company's financial performance. The process of accumulating data pertinent to creating major financial statements, such as an income statement and a nett worth statement, is also sped up as a result of this improvement.

Taking into consideration all of these benefits, it is in your best interest to use this bookkeeping approach for your company. Even though it will take some time to become proficient, there are a lot of helpful guides, lessons, and advice available online.

Highest Flexibility For All Needs

Banana Accounting Plus is adaptable to accommodate your specific requirements.

Your work is made easier because it assists you in the establishment of your chart of accounts. You can choose one of the many pre-made templates that are available for each activity, country, and language, and then modify it to meet your specific requirements. Everything else is taken care of for you! After that, you can begin entering the details of your transactions.

Quick and Precise Bookkeeping

You can switch between tables at any time, copy, paste, and view all data:

• text that automatically fills up based on transactions already input.
• automatically reload memorised recurring transactions
• transactions that need to be reviewed or corrected should be highlighted with different colours.
• Receive notifications of errors and make corrections whenever you like.
• connect each entry to the appropriate digital file.

Blockchain Security Assured

It is essential to ensure safety. Because of this, Banana Accounting Plus provides you with blockchain technology to protect your files from being edited without your permission.

The first accounting software to include what would eventually be referred to as blockchain technology was Banana Accounting, which did so in 2002. Blockchain technology is presently utilised by Bitcoin.

Manage Tasks, Business Sectors, or Special Projects

Utilize the Cost / Profit Centers and Segments if you are interested in obtaining more in-depth details regarding particular costs and revenues. You will always be up to date with the most recent information regarding the development of a certain field or project. Do you require more detailed prints? With just one click, they are finished!

By conducting a thorough analysis of the expenses and revenues associated with your project, industry, or other activity, you will be able to acquire a better understanding of the costs that are involved as well as the profitability of the endeavour.

With Just One Click, Professional Results

Because everything is so well organised, generating balance sheets and revenue statements takes only a few moments whenever they are needed during the course of the year. Reports that make comparisons to earlier time intervals are also readily available.

You have the option of customising the logo that shows on all of the statements, as well as selecting a variety of colours for the column headings and the amounts themselves. After printing the document and making any necessary changes, you are finished! The following time, there is no requirement to start from the very beginning of the process. PDF-friendly. Quality data exporting to Excel, Html, Txt. Efficient, straightforward bookkeeping at its best.

Protect the Future of Your Business

If you want to be successful in business, you need to have a vision for the future and make plans accordingly. You will be able to improve your decision-making and reach previously unachievable levels of productivity when you use Banana Accounting since it makes it simple to set a budget.

• Forecasts for a single year or multiple years
• Projection of the shift in liquidity
• Simulations of the advanced planning process
• Printouts prepared by professionals that provide cost comparisons and account balances

System of Double-Entry Bookkeeping

The Double-Entry Bookkeeping System is the conventional form of record-keeping that is generally utilised by the vast majority of companies, bookkeepers, and accountants.

When compared to the procedure of the single-entry bookkeeping system, the process involved in the double-entry accounting system is significantly more involved, thorough, and complicated. It presents the idea of debit and credit, which indicates that with each transaction, there is something received (a debit) and something given up (a credit), and as a result, every documented transaction impacts two or more accounts.

The fact that the double-entry bookkeeping system includes a procedure to guarantee the precise and comprehensive recording of business transactions is one of the many advantages offered by this method of accounting. As a consequence of this, it is an accurate source of financial information and may be used to fairly evaluate the state of a company or how well it is doing.

Companies that habitually deal in more complex transactions typically utilise bookkeeping systems that include two entries for each transaction. For instance, businesses that generate revenue through accounts receivable and that acquire goods and inventories on credit are better suited for this technique. This system logs individual transactions as an item of income or expense, and then it generates a second entry to link each transaction to the appropriate account.

For instance, if you make money off of a client, that revenue gets recorded as income and is also linked to the client's account. You will have a paper trail to rapidly obtain the information you need in the event that you are subject to an audit or if you are required to determine the origin of payments made for income and expenses. This method makes use of debits and credits, which are terms used in accounting to describe increases and decreases made to various accounts as a result of transactions made by a user.

A double-entry system is often utilised by organisations that are larger and more sophisticated. On the other hand, small businesses that engage in more intricate financial operations will also profit from using this interface.

In its most fundamental form, the double-entry system is characterised by the practise of initially recording single transactions as either a revenue or an expense item. The system then generates a second sub-entry in order to link the transaction to the appropriate account. Thus, it allows you to monitor five transactions at once: costs, revenues, equities, assets, and liabilities.

In addition to this, it is able to determine gains and decreases inside each account by using debits and credits. It acts according to the principle of the two-fold effect, which asserts that there has to be a value given up for every value that is received (a debit) (credit). When it comes to maintaining track of current financial records, creating projections for the future, and precisely tracking assets and liabilities, having the capacity to understand what aspects of a corporation are impacted by a particular transaction is of the utmost importance.

The double-entry system is a requirement for all businesses with more than $5 million in gross sales or more than $1 million in gross receipts from inventory sales. Smaller businesses have the option of adopting the system if they so choose; however, it is a requirement for all businesses with more than $5 million in gross sales. The single-entry system is incapable of dealing with the intricacies of such a large corporation because of their sheer number.

The double-entry technique is prefered by many owners of businesses since it makes it simpler to comprehend the company's financial accounts. Every single transaction that takes place is logged, and it is very evident how each one impacts the account that corresponds to it.

It paints an unmistakable image of how the company's finances are doing at any one time. When you compare one time period to another, you can quickly and readily spot errors, growth patterns, loss patterns, and other important facts. As a consequence of this, businesses are able to adopt a holistic perspective of their anticipated financial potential and make appropriate preparations.

The double-entry system is superior in most respects; nonetheless, it is challenging to implement for those who lack relevant prior knowledge. In addition, owners of start-up companies who are looking to keep their expenses to a minimum may find that they are not able to manage the system on their own and will thus need to hire an accounting professional. Overall, more effort and financial investment are required to sustain this system.

Bookkeeping Software

Bookkeeping software is used by many owners of small businesses in order to keep tabs on their companies' financial activity. Quickbooks and Sage, which was formerly known as Peachtree, are two examples of programmes that make use of the double-entry bookkeeping technique; nevertheless, it is not necessary for you to have a strong understanding of the process in order to operate the software. You will be prompted to enter information in order to finish and post your transactions using these tools, which are not overly complicated to use. There are several different software versions available, with capacities ranging from fundamental to professional, and you can get the software in desktop, internet, or cloud-based iterations.

There are dozens of computerised bookkeeping systems available on the market today. This is due to the fact that bookkeeping systems are typically complex and challenging for the average bookkeeper to learn and run. These structures use either the single-entry or double-entry approaches, and they simplify the process of entering transactions in accordance with the chosen method.

There is accounting software available that is tailored to both small and large enterprises alike. Interfaces that are simple to use make it possible for small businesses to easily monitor all of their accounts and transactions. A fundamental accounting software package is all that is required; there is no requirement for specialised services to be provided.

Although it is likely that larger firms would want the services of a bookkeeper, using computerised software may make it simpler to ensure that everyone is working from the same page. Because no two companies are the identical, it is highly possible that they will also want a bespoke software solution that is tailored to meet their specific requirements.

Automation is the feature of computerised systems that provides the most value. It is able to record real-time transactions accurately and efficiently, including both receivables and payables. All of the transactional operations are sped up and their correctness is improved.

It is pricey, and there is a possibility that you will require assistance in the beginning in order to set it up. Additionally, contrary to the widespread belief, it is not completely failsafe. For instance, a company's financial data could be stolen or modified, which would have an effect on the company's bottom line. Nevertheless, it is an effective choice for any company that is looking for adaptable services at a reasonable price.