Thursday, July 5, 2012

Create Your Own Simple Accounting System

People who keep track of their income and expenses have been using a Cash Book. This is a single entry system. You begin with a cash balance, record all income and expenses, updating your cash balance with every entry. This is a simple system that will facilitate your knowing where your cash has been coming from and where it has been going. People get immense satisfaction when they find that the cash on hand tallies (at least approximately) with the balance in the cash book.

But the drawback with this system is that you can't readily know how much money was spent for a particular item during a period. You will have to jot down the entries against that item separately and total them. A simple way to overcome this is to have a multi-column cash book. First ascertain what the major heads of expenditure are. Let us say, they are: Provisions, Rent, Car maintenance, Education, Entertainment and Electricity. You can club all other items under a category called 'Others.' Whenever you spend a money, you can enter it under the appropriate head.

There will be a column for the Total and the last column will be Cash.
Business concerns also use this system and this register is called Petty Cash Register.

Accounting Homework Help


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