If you run a large business, which the government defines as one that grosses over $5,000,000 per year or has over 500 employees, you may be required to use double entry accounting procedures. All of your finances are categorized as assets, liabilities, equity, revenue or expenses. Through the equation ASSETS = LIABILITIES + EQUITY, each and every transaction you make is assigned a chart of accounts number for each side of the equation. Having two account numbers makes it dual entry. One part of the equity is your profit or loss which is defined by PROFIT = REVENUE - EXPENSES. Individual transactions are entered in the JOURNAL and then periodically posted to the LEDGER, that will then contain a summary of the transactions.
The I'm No Accountant Workbook for Excel uses a single entry accounting procedure, and is based on cash flow into and out of your checking account. The transactions are just the deposits into your checking account, and checks or bank charges that remove money from your checking account. Each transaction is assigned one account number: one of the INCOME account numbers for deposits, or one of the EXPENSE account numbers for expenses paid. You select the account from the list of names in a drop-down box.
For each deposit made or check written, Transactions displays a DEPOSIT, PAYMENT or SALARY dialog screen. The information you type in is automatically entered into the transaction journal. In addition to the information you already have, you will need only to select a category from the list of named categories. You can also add new categories.
When you finish entering transactions, the software will automatically summarize all transactions in the ledgers. All transactions with the same account numbers will be added up, summarizing where the money came from and where it went.
Because all checking transactions have been entered, the Reconcile command can be selected to reconcile the bank statement with the checking balance in the spreadsheet.
The I'm No Accountant Workbook for Excel keeps track of profit and loss, the bank balance, expenses by category, and income by category.
A dual entry system would also keep track of all loans, all holdings such as real estate and furnishings, accounts receivable, accounts payable, depreciation, and credit card accounts. However, you would also have to know and to enter this information.
If you need a full picture of your financial situation, and have the time and the information for the data entry, you should investigate a dual entry accounting system. If you only need information on profit and loss, categorized transactions, and up to date checking account balances, then the I'm No Accountant Workbook for Excel single entry system may be all you need.