important aspects and rules of book keeping? The Basic Rules By conven

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important aspects and rules of book keeping?
The Basic Rules By convention all accounting records are kept in ledgers (a term derived from the time when accounts were written up into large books called ledgers) that consist of pages of analysis columns used for recording details of individual business transactions that occur over a given period. By convention: Every transaction will always require two equal and opposite entries in the ledgers. The two main number columns in the ledger, are called the Debit and Credit columns. The Debit column is on the left, and the Credit column is on the right. The first point to make, is that double entry book-keeping is a very simple set of rules that has evolved over many centuries. The same principles apply even today in the age of computerised accounting systems. All businesses are required by law to keep a written record of their day-to-day business transactions. The purpose of double entry book-keeping is to ensure that the records prepared under this convention, can be universally understood by anyone with the authority to read them. Book-keeping is a set of rules that define how each kind of business transaction should be written up into the accounting records. The best way of coming to grips with the process is to follow a few simple transactions as they are recorded in a set of manual daybooks. Double entry is one of those odd subjects you meet in life, where you will never understand the individual parts until you have looked at the whole process. Many people get very¦

trated when they first try to learn the system. Their mistake is to try to get to know all about each part of the system, before moving onto the next. Save yourself of lot of time and unnecessary anguish. If you do not understand one aspect of an individual process, dont waste time by reading it again and again in the hope that eventually the penny will drop. Press on to the next section. The explanation you are looking for will nearly always be found further down the page. Another tip is to just accept that many of the rules have been formulated because there is simply a need to define a convention for everyone to follow. You can waste many hours of trying to understand why a bank payment should always be recorded as a credit entry in the right-hand column of the bank ledger, instead of just accepting that it is just the way it is always done. If everyone makes the entry this way, then (in theory at least) those accounts should be understood by any other book-keeper. Why do the British drive on the left-hand side of the road? Answer “ by convention of course as it avoids a lot of unnecessary accidents. In both cases, it could so easily have been the other way around.

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