Accounting Systems are of Different Types

Author: vish ks

Author: vish ks

Different types of accounting systems are prevalent, and they help in maintaining business records. Of these, the cash system of accounting records only cash receipts and payments. It follows the assumption that there exists zero number of credit transactions. If at all some credit transactions do happen, these are not recorded unless and until the cash is actually received or paid. To cite a few examples of this type of cash system, the receipt and payment account of various entities such as clubs, societies, hospitals and educational institutions fall under this category. The system of Single entry ignores the two-fold aspect of transactions as considered in double entry system. In the single entry system, the personal aspects of transactions, in other words the personal accounts, only are recorded. The method simply ignores the impersonal aspects of a transaction excluding the cash. It does not have any safeguards regarding the accuracy of posting and is not at all safe from fraudulent practices because it just overlooks any safety measures that have to accompany the activity of recording cash transactions. Due to this, it is considered an imperfect accounting practice. The double entry system, on the other hand, with the passage of time, has gone through a number of developmental levels and stages. Double entry system is the one and only method that fulfils all the essential objectives of a systematic accounting process. It takes care of the two fold aspect of each business transaction. A system that keeps accurate records of all the occurring business transactions only will help the business owner to know the amount he has amassed or lost. The primary aim of any business is to earn maximum profits by incurring minimum expenses. Towards achieving this, an organization engaged in business always tries to expand the business and will strive to increase its sales while reducing the operating expenses. The progress made with regard to this corresponds with properly maintained financial documents and records. In the early times, the main goal of accounting was to simply know the result of their business activities, i.e. whether some profit has been made or any loss has been incurred. It would also show the financial position of a business on a particular day also. Apart from all these, accounting has to meet the various requirements of tax authorities, investors, government rules and regulations, the management and share holders or owners. This aspect has widened the scope of accounting and is rightly defined as the art of recording and classifying money transactions and events that occur, and the interpretation of the results there-of. One is beset with the doubt whether accounting can be termed as a Science. Accounting documents, in no way, establish a cause and effect relationship. The fact is that it only provides one with a procedure which when followed religiously will help in accomplishing the objectives of accounting. In that case, accounting is an art, and not at all a science. And, the very art of bookkeeping is as old as the art of trading and commerce itself. About the Author:

The author is an SEO copy writer and internet marketing specialist. To know more about

accounting & bookkeeping and accounting services visit lbks.co.uk/

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