Sana-The Commerce House

UNIT - II Systems of Accounting Systems of accounting refer to the two systems of recording the financial transactions in the books of accounts. These two systems are the single entry system and the double or dual entry system. Let us learn about both in brief. It allows for the preparation of the balance sheet which will reflect the financial position of the organization Easy to detect frauds and  errors  in this double entry system Basis of Accounting This deals with the timing of the revenue recognition, i.e. when should the revenue be recognized in the books of accounts. There are two approaches to this dilemma – cash basis of accounting and accrual basis of accounting. Let us take a brief look at both. Cash Basis of Accounting This is the simpler, uncomplicated approach. Under the cash system of accounting an  income  will only be recorded when it comes in. So an income will be earned when it is received in cash by the organization. And similarly, the expenses w...