Bookkeeping is the duty to record the financial transactions and information pertaining to a business, on a day-today basis. It is concerned to ensure that records of financial transactions for those individual are accurate, up-to-date and comprehensive. Therefore, accuracy is important and vital to that bookkeeping process.
Bookkeeping must not be confused with accounting. Bookkeeping is more the preliminary work that provides the information that goes into the accounts.
In fact, if you compare the differences between bookkeeping and accounting then you will reveal the true essence of the definition of bookkeeping.
What does bookkeeping involve?
Common financial tasks and transactions that are involved in the bookkeeping process are mainly including:
• Billing for services provided or goods sold to clients.
• Recording customers’ receipts.
• Recording and verifying and invoices from suppliers.
• Paying every supplier.
• To process the pays of employees pay and the related reports for the governmental.
• Monitoring the individual accounts receivable.
• Recording and other adjusting entries.
• Providing financial reports.
How is bookkeeping done?
Nowadays, the bookkeeping process is performed with the use and help of computer softwares. QuickBooks (from Intuit) is – as example– a low-cost an accounting and bookkeeping software package. Bookkeeping requires knowledge of credits and debits and a basic understanding of financial accounting process, which is including a balance sheet and income statement.
The difference between Accounting and Bookkeeping
Katie Bunschoten, is the owner of consulting and bookkeeping firm; KHB Office is helping new businesses get up and running, and tutoring owners how to keep at the top level of accounting. A Small Business Blog had recently asked for her take on accountants vs. bookkeepers and when to hire them.
She says that ultimately bookkeeping is as literal as it sounds: it is the keeping of books i.e. the production of financial transaction records. Accounting is more to do with the analysis, reporting and even possibly the consulting and advice sharing based off of the back of these reports.
No transaction is exempt from bookkeeping, including loans given and received, sales and deductions as well as private expenses. Whatever goes in or out of the business is recorded with full accuracy.checkout this website for more information.
The double entry system of bookkeeping
The double entry system of bookkeeping is based upon a fact where every transaction involves two parts and that this will therefore affect two ledger accounts.
Can you guess what these two things are? …yes you’ve got it, debts and credits. Or outgoings and incomings, whatever you want to call them they are the cornerstones of your business.
Every transaction involves a credit entry in one account and a debit entry in another. Any errors occur when the books do not ‘balance’ i.e. the sum of all the debits do not tally up with the sum of all the credits.visit http://www.tampabay.com/blogs/the-buzz-florida-politics/senate-questions-legality-of-enterprise-floridas-bookkeeping/2245523 for more detailed information.
In conclusion, bookkeeping using bookkeepers, is namely the keeping of financial transactions, different to accounting in that it’s more the preliminary process where the data is retrieved and stored.