Using double entry system accounting in QuickBooks for recording transactions
The main objective behind maintaining the books of accounts is to maintain your business data in a manner that you don’t miss out on any records and have all the data ready to calculate the profit or loss that you generated from your business, accurately. There are accounting standards and guidelines which are required to be adhered to maintain the books of accounts. And these standards are the rules of the government which requires all the businesses to record, maintain and present all the books of account in a manner that is presentable unanimously. One of the recognized methods of accounting is the double entry system of accounting which forms the base of each transaction we undergo. QuickBooks works on the double entry system of accounting thus matching the requirements of the guidelines as well as suiting the needs of all businesses.
How does double entry system of accounting work?
Double entry system if accounting actually means that each transaction you do shall affect at least two accounts. The dual effect of transaction shall take place i.e. the debit and the credit. Thus when you are entering into a sale, you will not only Debit the customer’s account but also credit your stock account. And when you get the payment you will be crediting the customer’s account and debit the cash account making it easy to recognize which step of the transaction you are in and if the customer’s account is settled or not. Thus a debit and a credit cancellation balance the customer’s account which means there are no overdue from the customer. Double entry system of accounting has a dual effect which makes recording of transactions, checking the balances, and creating balance sheet easier.
How to maintain transactions of double entry in QuickBooks?
QuickBooks maintains the transactions in the double entry system and there is no special need to make any efforts towards recording the transactions in double entry system in QuickBooks as it is inbuilt. When you open the accounts list you will see that every account has a debit and credit section which gets adjusted each time money is received or goods are sold. These effects take place when the invoices are made and are adjusted according when the transactions are recorded in QuickBooks.
How does double entry system of accounting help in QuickBooks?
QuickBooks is one of the easiest accounting tools to work with when it comes to maintaining the books of accounts as most of the processing and preparation of forms are done automatically. With the World Wide Accounting Standard of double entry system of accounting, QuickBooks makes it easier to record transactions and track where the sale has been made, where the money is coming from, where is it going, the goods purchased in a year, the amount sold and the amount still pending in stock etc. QuickBooks double entry system of accounting helps in tracking each movement of the business and makes it understandable with ease.
QuickBooks follows the Accounting Standard and maintains the books in double entry system of accounting complying with the rules that are necessary to be followed by each enterprise or company.