Best Accounting MethodsBy Amigo Bland
Accounting is often said to be the language of business. The actual record making phase of accounting is usually called book-keeping. However, accounting extends far beyond the actual making of records. Accounting is concerned with the use to which these records are put, their analysis and interpretation.
Firstly, we need to understand the basic structure of accounting records. With the very smallest type of organization, it would possibly be sufficient to have the book-keeping records written in just one book. This we would call the ledger. As the organization grew the amount of book-keeping entries needed would outgrow the limitations of the use of one ledger only.
The best method is to divide the ledger up into different books and each book would be for a specific purpose or function. The functions are as follows and the principles remain exactly the same no matter whether manual, computerized or using accounting software :-
Sales Ledger / Purchases Ledger / General Ledger
(all contain accounts and are therefore part of the double-entry system)
(normally consider as part of the double-entry system)
Sales Journal / Purchases Journal / Returns Inwards Journal / Returns Outwards Journal
(mere listing devices to save the accounts in the General Ledger from unnecessary detail)
(for all transaction which do not pass through a book of prime entry)
By Amigo Bland