A Revenue and Expense Journal is used by most small businesses and is single-entry accounting -- recording receipts and expenditures only

Revenues and Expenses

Your business will use either a Revenue and Expense Journal or a Ledger to keep track of how much money is going out, where it is going, and what is coming in.

A Revenue and Expense Journal is used by most small businesses and is single-entry accounting -- recording receipts and expenditures only. Double entry accounting involves a ledger and necessitates that each activity be recorded as a debit and a credit on your books. In the past it was thought that all businesses needed to use the more cumbersome method of double-entry, but the single entry system is now used for many small business owners. Single-entry accounting can be kept on paper or computer. Programs that perform single-entry accounting include Quicken by Intuit and Microsoft Money among many others.

A ledger is used to record every transaction twice based on the idea that each transaction has two halves that affect your business. For example, if you sell an item, your books would reflect a decrease in inventory (a credit) and a inflow of payment (debit). If you use double-entry accounting you may want to use a computer program or a bookkeeper to keep your ledger up to date. If you allow anyone else to keep your books be sure you review them regularly. Programs that do double-entry bookkeeping include: M.Y.O.B by Teleware, Peachtree Accounting by Peachtree Software, and Quickbooks by Intuit.

Your accountant can advise you on which type of recordkeeping you should choose. Also consult your tax advisor about whether you should use a cash or accrual-based bookkeeping system.