Double entry bookkeeping is an accounting method whereby one transaction is recorded, equally, in at least two accounts. For example, if a debit is made in one account and a credit is made in another, then the total debits and credits must balance. This then means that a business is accounting for the total value of a transaction, whether it be in Pounds, Dollars, Euros or otherwise.
Imagine a journalist has bought a new laptop for £1,000. The journalist would then have to debit their asset account with £1,000 and credit the bank account with the same value. This is mainly because the asset value is now worth £1,000 more, but the journalist has £1,000 less in the bank account.
Debits will increase expense or asset accounts whilst decreasing liability or equity accounts, whereas credits will decrease an expense or asset account and increase the equity or liability accounts.
Who uses double entry bookkeeping?
Anyone completing bookkeeping should use a double entry bookkeeping method, no matter the size of the business. Accounting software can help you to manage your double entry bookkeeping more effectively. Double entry bookkeeping is used to keep track of Income & Expenditure, as well as Assets & Liabilities.
Double entry bookkeeping is commonly used because it is considered to be one of the most effective, accurate ways of monitoring the financial situation of a company as well as determining how fast the business is growing.
Double-entry bookkeeping services are, and should, be carried out by highly-qualified, experienced bookkeepers and accountants, such as the ones employed by us here at RLTP Accountants. We have a dedicated team of fully-trained specialists at the helm of everything we do, so you can be sure that you’ll be in good hands with our accountancy experts when it comes to double-entry bookkeeping and any other accounting service you might need.
Why is double-entry bookkeeping important?
Where exceptionally small, possibly new or startup businesses will be able to get away with single-entry bookkeeping, there are plenty of advantages to undertaking double-entry bookkeeping services from us here at RLTP Accountants. Just some of the benefits of double-entry bookkeeping includes, but is not limited to, the following:
- Delivers a full, complete financial overview
- Enables companies and businesses alike to make better financial decisions
- Reduces the risk of bookkeeping errors
- Keeps track of money owed and money due in, allowing for better financial forecasting
To learn more about how double-entry bookkeeping could help you today, get in touch with us here at RLTP Accountants. We can offer your business a complete, wide range of accountancy services to help you get your business finances under control. You’ll always be able to rely on our specialist team of professionals – we’re proud to operate throughout Derby, Nottingham, Leicester and the surrounding areas.