Bkper double entry accounts explained
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Double entry bookkeeping involves making at least two equal entries for every transaction, with one entry recording a debit to one account and one recording a credit to another related account. Accounts represent a T-shaped balance sheet with debit and credit sides. For example, when reimbursing a collaborator's expenses, the credit entry is recorded in the bank account to show money decreasing, while the debit entry is recorded in the collaborator's account to show money increasing. Bookkeeping software like Bkper performs double entries for all transactions to keep debits and credits in balance.
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Bkper double entry accounts explained
- 1. How does double entry bookkeeping work? Each time you make a transaction, like when you pay someone, you are going to make at least two entries in two different accounts. What is an account? An account represents a T balance with a debit (left) and a credit (right) side. Account Credit (right)Debit (left)
- 2. What else? Debit and Credit are always in balance in a book. A booking always consist of a Debit and Credit entry in a book. To start a book you make balance adjustments to your accounts. Debit entries mean an increase on the account * Credit entries mean a decrease on the account * * reverses on credit accounts Debit and Credit bookings are always in two different accounts.
- 3. A simple example You pay a delivery with a bank transfer. Bank 12 05 2015 4000 delivery. This is a credit entry on your Bank account. Expense 12 05 2015 4000 delivery. And A debit entry on your Expenses account.
- 4. How do you represent this with double entry bookkeeping? Lets walk trough another example Your Collaborator goes on a trip and makes some expenses and at the end of the month the company reimburses these expenses.
- 5. Collaborator So the collaborator has a pizza for lunch and spends $ 50,00 Expense The Credit entry to be recorded is the Collaborator spending (decreasing) its $ 50,00 The Debit entry to be recorded is the Expense increasing with $ 50,00 12 05 2015 50 pizza 12 05 2015 50 pizza Example
- 6. Collaborator The collaborator stays that night in a hotel for $ 250,00 Expense The Credit entry to be recorded is the Collaborator spending (decreasing) its $ 250,00 The Debit entry to be Recorded is the Expense increasing with $ 250,00 12 05 2015 50 pizza 12 05 2015 50 pizza 12 05 2015 250 hotel 12 05 2015 250 hotel Example
- 7. At the end of the month it is time to reimburse your Collaborator’s expenses. Example The reimbursement represents a bank payment to your collaborator of all his spendings. The Credit entry to be recorded is the Bank account transfering (decreasing) $300,00 The Debit entry to be recorded is the reimbursement on the Collaborator account with $300,0 CollaboratorBank 12 05 2015 50 pizza 12 05 2015 250 hotel 31 05 2015 300 reimbursement. 31 05 2015 300 reimbursement.
- 8. How does bkper do this? In the exact same way! Bank 31 05 2015 300 reimbursement. Collaborator 31 05 2015 300 reimbursement. Expenses 12 05 2015 50 pizza 12 05 2015 250 hotel 12 05 2015 50 pizza 12 05 2015 250 hotel
- 9. How does bkper do this? In the exact same way! 31 05 2015 reimbursement. 12 05 2015 12 05 2015 pizza hotel Collaborator Expenses Expenses Bank Collaborator Collaborator 50 250 300 Credit Debit
- 10. And this is how it looks like in bkper Accounts Transactions
- 11. Choosing Your Accounts Keep it simple BankWork Expenses 02 05 2015 3000 Salary 12 05 2015 50 pizza 12 05 2015 250 maintenance 02 05 2015 3000 Salary 12 05 2015 50 pizza 12 05 2015 250 maintenance With just a few accounts you can book everything
- 12. Choosing Your Accounts Add some detail to your accounts. Cash accountWork Food 02 05 2015 3000 Salary 12 05 2015 50 pizza 02 05 2015 3000 Salary 12 05 2015 50 pizza Savings House 12 05 2015 250 maintenance 12 05 2015 250 maintenance 31 05 2015 500 monthly saving 31 05 2015 500 monthly saving
- 13. Group Accounts Cash accountWork Food 02 05 2015 3000 Salary 12 05 2015 50 pizza 02 05 2015 3000 Salary 12 05 2015 50 pizza Savings House 12 05 2015 250 maintenance 12 05 2015 250 maintenance 31 05 2015 500 monthly saving 31 05 2015 500 monthly saving Income , Assets & Expenses INCOME Assets Expenses
- 14. Group Accounts Expenses Savings BankWork Food House AssetsIncome A simpler vission of accounts and Groups
- 15. Transactions This is what it looks like in bkper
- 16. Accounts and Groups This is what it looks like in bkper
- 17. Continue building Build in the complexity required for your situation. Assets / equity Cash transport Bank lodge food Expenses Service A Product B Client A Employees Employee Collaborator Suppliers Provider Supplier Client B Product A Product B Service A Inventory Customers Sevices Provider Revenue INCOME / RECEIVABLES ASSETS / EQUITY PAYABLES / EXPENSES
- 18. Learn More ... Features Tutorials Blog