By definition, Double Entry Bookkeeping is a financial transaction’s system of accounting used for hundreds of years now. It is the basis of all the cloud-based bookkeeping systems, the banking system, and the reporting system businesses use globally. If you are a business owner in the UK, for a better understanding, you can always speak to experienced tax accountants in the UK.
It lets a business keep a check and track all the transactions and this helps the business to understand their performance. Let us talk about cash balance, business growth, and profitability. It is also compatible with all the recurring reports and requirements for submission a business may have – tax returns, annual accounts, VAT, etc. all of these depend on double-entry bookkeeping.
Uses of double-entry bookkeeping
Double entry bookkeeping (also known as double-entry accounting) helps a company to keep track of all records of its ongoing financial transactions systematically. It can then offer the information needed by the owners or their accountants to comply with all of the business’s tax and financial submission needs, such as VAT returns, yearly accounts, and tax returns. Hiring tax accountants in the UK is the best way forward because they handle all the hassle for you.
It also allows the business owners to check how well is the company doing concerning financial decisions. There is where the double-entry bookkeeping jumps in and manages a detailed report about the finances of the company.
Making bookkeeping simpler with TaxAdvisor
For an experienced double entry bookkeeper get in contact with the taxadvisor UK. We can help you spend 100% of your time concentrating on your business instead of building up processes, knowing that someone will handle all of your bookkeeping needs. Moreover, we use a cloud accounting system that makes it more feasible as we are amongst the best tax accountants in the UK.
Philosophies of Double-Entry Bookkeeping
Double entry bookkeeping’s principles are simple – Each transaction must have two opposite and equal elements. For instance, if you trade a good then the level of your stock should reduce and cash balance should increase. Therefore, you will see accountants referring to ‘Balance Sheet’ and explaining the concept of balancing in accounts.
All these entries which result in double entry bookkeeping are categorized as either debits or credits. They symbolize the two aspects of any accounting transaction
Whether the accounting records of a business are complex or not depends on the double entries. Later they become part of the “General Ledger” because this represents a sum of all entries, which the tax accountants can analyse based on the type of transaction it was.
Accountants write debit entries on the left and credit entries on the right of the journal entries. Using a trial balance allows accountants to show the breakdown of transactions and summing all linked debits and credits. Therefore, your trial balance reflects credit entries, which equal debit entries if it is done right. Hiring expert tax advisors in the UK is the best way forward because they handle it all for you.
The transaction or accounts categories in a general ledger include:
For more information and assistance, if you own a business in the UK, consult expert tax advisors in the UK. It will save you from unnecessary stress.