Usefulness of Double-entry Accounting

When If someone wants needs to have create an evidence a record of income and expenses transactions, then they he can use the Excel application, You can see where such application will be useful to manage your cash money flow. went and where they come from, but you can't see where you spend more or less money by category. However, if you need to analyze your income and expenditure transactions, you have to use more advanced application Some good applications like Mint. can help you to do it better and you will see it by category One of the main function of this application is to have your transactions analyzed by category. You can even see when you have to pay a bill and some programs also do it automatically Also, the system will generate automatically the payment schedule of your bills. This is very useful and it helps a lot! By owning old computer and mobile, I can't afford to have these good such advanced apps, but I don't want them. I want My intention is to have a system of double-entry accounting system. What is does it mean?

Double-entry accounting system is little bit more complicated sophisticated but logical financial system. When you receive your money from your job At the time of receiving your payroll, then you have to write them into income it will be fed to the system as an income transaction (you normally do that with Excel), and then into cash, or bank account hence, it will affect your cash or bank account in the program system. Every transaction has two sides legs, credit and debit. What is this good for? Lets Let’s say that you have to pay your monthly mortgage, and as you know you have to pay it every month Double-entry accounting says system what you have will record (your home property as an Asset) and where you got money to have it (your mortgage) and generate the installment schedule of your mortgage based on the payment agreement. Every month you pay, you see in the program how much you have to pay in total until you mortgage will be repaid. You always have an evidence of what you have and what you have to pay (liabilities), so you know how much you can afford By having actual and accurate income and expenditure transactions the system will assist you to manage your cash flow, through showing your proper income and real liabilities.

Another thing which is useful is the evidence of your property which belong to the assets group. You always know what you have, what has depreciating value and what should be replaced. Of course you know it without evidence, but you forgot and sometimes you get surprised by that you have to buy something new. To have the evidence is nice, but you need to know what your expenses are and what more you can spend. This is called Cashflow. It is what remains of your salary after you have paid all your liabilities. This is very useful for planning and increasing your income and expenses. Finally, you can just spend your money every month or you can invest them and gradually increase your Cashflow. It is very nice feeling to see that some money are coming without an effort, isn't it? ;)

The system has other feature, where you can calculate your assets depreciation. This function will help you to manage your investment plan and evaluate your portfolio based on the current market value.