In 1458 Benedikt Kotruljevic wrote about double-entry book-keeping in his: Book on the-Art of Trade.
However, a monk names Luca Pacioli in Milano who was also said to have been the math teacher of Leonardo Da Vinci, is often accredited with inventing Double Entry Accounting. In 1494 he composed the Summa de Arithmetica, Geometria, Proportioni et Proportionalita.
Whoever it was, the process used by accounting organizations to this day was invented in the 15th century.
Nonetheless, one of the biggest things that small businesses struggle with is this region of accounting and bookkeeping.
It can be very complicated so they will have little education in the area, is not surprising that they struggle with it.
For centuries, small business owners have maintained a ledger that records the money in and the cash out, together with other ledger records of money owed to them (accounts receivable) and money owed by them (called accounts payable.)
As an example, transactions are divided into 5 kinds – expenses, liabilities, equity, revenue and assets for double entry bookkeeping.
So individuals who are untrained in bookkeeping can find it difficult to understand that an increase in expenses and an increase in assets are both debits. And likewise, a rise in revenue and liabilities are both credits.
The introduction of applications and computers has given everybody in small business the chance to to maintain their own double-entry bookkeeping records. Unfortunately it has not brought with it the mandatory levels of ability because, as we mentioned earlier, double entry bookkeeping is confusing.
What conceptually could happen to be a benefit to both small business owners and their accountants can trigger a lot of additional cost for the small business people and give accountants a lot of headaches.
When many small business owners try to do their own bookkeeping, or when they engage bookkeepers who do not actually understand double-entry either (perhaps not all of them of course), they trigger an enormous issues for their accountants who often have to invest hours of time finding the errors and correcting them in order to prepare right financial statements.
So the purpose for this blog would be to explore the notions of small business bookkeeping and accounting, what is changing, what is new and what’s successful for small companies to maintain great records that reduce their prices and make life easy for their tax advisers and accountants.
Learn more about double-entry book-keeping at http://en.wikipedia.org/wiki/Double-entry_bookkeeping_system