Describe the various types of accounting systems ?
ACCOUNTING SYSTEMS
There are two main accounting systems:
1) Cash
2) Mercantile
In cash system entries in the book are done only when the amount due has been received. It is not shown as due at any stage.
On the other hand in mercantile system, a record is made on the basis of accounts having become due for payment or receipt.
Transactions are also of two types: Double and Single entry. The double entry system is based on the fact that a transaction is a double-sided affair. If one receives something, somewhere something must have been reduced, or some service must have been rendered.
A single entry system on the other hand is concerned with only one side of the transaction, either you pay someone or you receive from someone.
The double entry system is more accurate, scientific and systematic.
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