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Define Economic

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SINGLE ENTRY BOOK KEEPING AND DOUBLE ENTRY BOOK KEEPING SINGLE ENTRY SINGLE ENTRY BOOK KEEPING FEATURES • It is simple • All transactions are recorded only once • No credit and debit side LIMITATIONS • It is not possible to understand the impact of various transactions in the business • Not possible to understand the expenses, income or profit quickly • Hence this system is not used for business purpose. • FORMAT DOUBLE ENTRY BOOK KEEPING • Every transaction has two sides, one debit side and other credit side • Every transaction is entered two times, one on debit side and the other on credit side • Debit or Dr is recorded on left hand side and credit or Cr is recorded on right hand side • Every transaction of business is recorded on the same day as it takes place in a book called Journal • Journal is the Primary and Original Record of bookkeeping and prepared in chronological order. • (contd) • From Journal, all transactions pertaining to one ‘Account’is entered in a book called “LEDGER” eg cash account ledger, rent account ledger etc • Ledger is the second record of book keeping. • The entries made in different Ledgers are checked by making a “ TRIAL BALANCE” • Financial Statements like “ Profit and Loss Statement”, “Balance Sheet” etc are prepared from Ledger • (contd) • Double Entry System of book keeping provides a clear picture of all transactions • It facilitates financial monitoring and control. • T ...
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