The Role and Importance of Double-Entry Bookkeeping
Dating back to the 13th century, the invention of double-entry bookkeeping opens a plethora of opportunities for a present-day accountant. By adopting the principles of double-entry bookkeeping, an accountant is capable of improving the accounting standards by raising the accuracy of calculations a few notches and making the communication process clearer. Indeed, a closer look at the effect that a proper accounting strategy has on entrepreneurship will reveal that, with the adoption of the right approach, it becomes possible to understand the financial condition of a business enterprise. Hence, with the creation of two entries, which allow an accountant to monitor every single financial transaction, the quality of the supervision process will double.
Creating a big list can be viewed as a reasonable alternative. However, with a big list, it is very easy to get a lot of the transactions mixed up. A double-entry approach, in its turn, helps create an orderly system of records by providing a detailed overview of the recent transactions and monitoring the process from two perspectives, which a big list cannot do. The latter option facilitates a more careful and, therefore, outstandingly accurate approach towards accounting, reducing the possibility of a mistake to zero. Seeing that a journal entry is viewed as a tool for the analysis and description of an impact of a transaction on a business entry, the double-entry approach presupposes a two-perspective analysis of the financial data. The specified analysis, in its turn, helps understand the nature of a transaction and, hence, leads to an enhanced accounting process.