Book entry
Imagine you have a piggy bank where you save your money. Every time you get some money, you put it in the piggy bank. You know how much money you have by the number of coins and bills inside.
Now, imagine you have a special book where you keep track of all the money you have. Every time you put money in the piggy bank, you write down how much it is in the book. And every time you take money out of the piggy bank, you also write down how much you took out.
This book is like a record of all the money you have, even if it's not actually in your hands. It helps you remember how much money you've saved and how much you've used. It's like your own money diary!
In the real world, businesses and banks use something similar called book entry. Instead of a piggy bank, they have a bank account where they keep their money. And instead of a personal book, they have a computer system that keeps track of their money.
Whenever a company or a bank receives money, they record it in their computer system. It's like writing down the amount of money in their book, just like you did with your piggy bank. This means they can see how much money they have without actually seeing the physical money.
Book entry is important because sometimes it's not practical or safe to handle lots of physical money. Imagine if a business had to keep a big pile of cash in their office or store. It would be very risky and could be stolen! So instead, they use book entry to keep track of their money electronically.
This way, they can still see their money in their bank account and know how much they have, but they don't have to worry about actually holding the physical cash. They can also easily transfer money to other accounts or pay for things using electronic methods, like online banking or credit cards.
So, book entry is like a special system that keeps track of money electronically, helping businesses and banks know how much money they have without dealing with the physical coins and bills.
Now, imagine you have a special book where you keep track of all the money you have. Every time you put money in the piggy bank, you write down how much it is in the book. And every time you take money out of the piggy bank, you also write down how much you took out.
This book is like a record of all the money you have, even if it's not actually in your hands. It helps you remember how much money you've saved and how much you've used. It's like your own money diary!
In the real world, businesses and banks use something similar called book entry. Instead of a piggy bank, they have a bank account where they keep their money. And instead of a personal book, they have a computer system that keeps track of their money.
Whenever a company or a bank receives money, they record it in their computer system. It's like writing down the amount of money in their book, just like you did with your piggy bank. This means they can see how much money they have without actually seeing the physical money.
Book entry is important because sometimes it's not practical or safe to handle lots of physical money. Imagine if a business had to keep a big pile of cash in their office or store. It would be very risky and could be stolen! So instead, they use book entry to keep track of their money electronically.
This way, they can still see their money in their bank account and know how much they have, but they don't have to worry about actually holding the physical cash. They can also easily transfer money to other accounts or pay for things using electronic methods, like online banking or credit cards.
So, book entry is like a special system that keeps track of money electronically, helping businesses and banks know how much money they have without dealing with the physical coins and bills.