Bookkeeping 101: Understanding the Basics

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The accounting process uses the books kept by the bookkeeper to prepare the end of the year accounting statements and accounts. Under single-entry, journal entries are recorded once, as either an expense real estate bookkeeping or income. If you’re just starting out, are doing your books on your own and are still in the hobby stage, single-entry is probably right for you. It’s simple, fast and good for really basic bookkeeping.

Double-entry SystemDouble Entry Accounting System is an accounting approach which states that each & every business transaction is recorded in at least 2 accounts, i.e., a Debit & a Credit. Furthermore, https://www.icsid.org/business/managing-cash-flow-in-construction-tips-from-accounting-professionals/ the number of transactions entered as the debits must be equivalent to that of the credits. Successful businesses need financial information to control costs, manage cash flow, and generate a profit.

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Using the cash method, Riverside would post $1,000 in sod expenses when they pay cash in February. Their $3,500 revenue would post when they receive cash from the customer in April. As your company’s bookkeeper, you may generate a tax report for your CPA. The report assigns each expense to the correct line on the company’s tax return. Reviewing tax reports can help you maximize tax deductions for your business.