What is bookkeeping? Let discuss it in detail

 

Why Bookkeeping is important for all business?

 

Accounting may sound like a great waste of time for most small business owners, but it's a quiet element that can either make or break your business. If you ever want to evolve from a small business owner to a big business owner, you'd better start taking accounting very seriously. Bookkeeping is a critical feature for small businesses, ensuring that they are financially responsible, safe and willing to expand. However, it's not always clear what the differences between the activities are.

Here’s a quick guide that defines the terms, examines what is bookkeeping. Its types, methods: -

 

So, Now What is bookkeeping?

 

Bookkeeping is a process of recording and organizing all business transactions that have taken place in the course of business. Bookkeeping is an integral part of accounting and focuses mainly on recording the day-to-day financial transactions of the business. If you're ready for growth and success, some of the books and records you're supposed to keep are:

·       Cash Book

·       Inventory

·       Profit loss

·       Credit book and many more

 

Tasks and examples of the bookkeeping system

 

The question arises, "What's the bookkeeper doing? "Some account staff perform many of these accounting tasks at the same time, while other organizations have specialized staff or contractors in different areas because of their large size and volume – like accounts payable.

We have summarized the different tasks performed by bookkeepers so that you can use them as a guide in conversations with bookkeepers.

 

Tasks

o   Setup of the accounting system

o   Entry and coding of data

o   Education in accounting applications

o   Receivable accounts

o   End-of-Term Reconciliation and Monitoring

o   Processing of payroll

Types of bookkeeping

 

There are two types of accounting systems used to report corporate transactions: singly-entry bookkeeping system and double-entry bookkeeping system.

 

1.     Single-Entry Bookkeeping System

 

The Single-Entry Form is the oldest and most simple way to maintain track of financial transactions, which are scarcely used these days. In this method, only one side of the exchange is documented because of the lack of any prescribed rules and thus the documents kept are more or less incomplete. Some of the features of single-entry Bookkeeping are listed below: -Maintenance of cash book

·       Personal accounts

·       Original vouchers

·       Final Accounts

·       Profit or Loss

·       Suitability

 

2.     Double-Entry Bookkeeping System

 

Double entry system refers to such accounting system under which every financial transaction is reordered into separate account with equal amount to determine the true profit or loss and financial position of the business. The double-entry bookkeeping system is regarded as the most scientific and complete system of the bookkeeping. It is universally used in modern entities.

Method of bookkeeping

 

After learning the two types of bookkeeping system, let’s now discuss the two methods of bookkeeping which are: manual and computerized.

 

Manual Bookkeeping

 

Manual bookkeeping is acceptable to IRS. If you choose to make manual entries, you will need some form of spreadsheet or ledger paper to track your entries. If you are not ready to invest in bookkeeping software, but are familiar with a computer, you can create an Excel spreadsheet. 

 

Computerized Bookkeeping

 

Computerized Accounting is an accounting system that uses an accounting software, for recording financial transactions electronically. Data content is recorded in customized database. Entries of transactions can be saved and backed up

 

Want more details? You can always drop a message at Accountants in London and Accotax will get back to you. Assisting you with any query you have, big or small, we are here for you. We are available on message, call, and even a one-on-one meeting. Let us know what suits you!


Resources:

1. https://ext-5636255.livejournal.com/1343.html

4. https://wordpress.com/post/accountantsforsmallbusinesses.wordpress.com/42

5. https://clearcollectiveposts.tumblr.com/post/642839857647026176/what-is-bookkeeping-let-discuss-it-in-detail

6. https://mix.com/!MDcxMDE0:london-chartered-accountants-%7C-chartered-accountants-london?utm_source=copy&utm_medium=web&utm_campaign=article_profile&utm_term=button

7. https://gumroad.com/accotax0/p/what-is-bookkeeping-let-discuss-it-in-detail


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