Various accounting systems are available for companies and individuals alike. When choosing an accounting system, the decision should take into account the price of the accounting system, the extent the system will be used, and the capacity of the user to learn to operate the system. Learning about the various types of accounting systems can help in the decision.
Single Entry System
This type of accounting system is the most basic. It is ideal for small organizations that have few and simple operations. However, there are no journal entries made to balance the accounts. Therefore, errors can occur often and undetected.
Double Entry System
The double entry system is more complicated but more accurate. In this system, each credit must have an equal debit, and vice-versa. In this way, errors are more visible and the accounting more accurate.
Manual accounting systems imply that there is no computer involved in the accounting process. The accountant is responsible for recording all journal entries in all journals, as well as corresponding entries and adjustments. The accountant must make all calculations, prepare the financial statements, file tax forms, etc. Thus, this accounting system usually takes more time and allows room for more human errors. However, it can save costs by eliminating the need for computers and accounting programs.
A computerized accounting system is the use of a computer program to accomplish accounting functions. This type of accounting system requires less work from the accountant, but requires an accountant with specialization in that specific accounting software.