Types and Methods of Bookkeeping System

Bookkeeping Systems

Single Entry Bookkeeping System

Double Entry Bookkeeping System

• The single entry system of bookkeeping requires recording one entry for each financial activity or transaction.
• Single entry bookkeeping system is a basic system that a company might use to record daily receipts or generate a daily or weekly report of cash flow.

• The double-entry system of bookkeeping requires a double entry for each financial transaction.
• The double entry system provides for checks and balances by recording a corresponding credit entry for each debit entry.
• The double-entry system of bookkeeping is not cash-based. Transactions are entered when a debt is incurred or revenue is earned.

Manual methodology of Bookkeeping

• It is a paper-based and traditional way of Bookkeeping.
• Transactions are recorded manually by hand using a paper book of accounts such as journal-register, ledger books etc.,
• Widely used by small businesses with less complex business transactions.
• Cheaper and easier to maintain but requires a lot of skill and time, sometimes turns out to be tedious task at hand.

Computerized methodology of Bookkeeping

• A new innovative way of recording business transactions.
• Uses accounting and bookkeeping software such as Tally.ERP 9 for recording transactions.
• An easier, faster and convenient way of recording business transactions.
• Eliminates the tedious tasks involved in manual bookkeeping.
• Reliable and accurate financial reports possible.