Bookkeeping: What You Need to Know

 Bookkeeping: What You Need to Know

Bookkeeping entails the recording of transactions that are financial and also involves the accounting process in business. This transaction combines the following, receipts, purchase, payment, and sales that are done by a person individually or by an organization. In bookkeeping, there are standard methods involved, and this includes bookkeeping systems that are double-entry and single-entry. Any process that records financial transactions is bookkeeping

The one who keeps books is known as a bookkeeper; this person records business transactions that are carried out daily. They record and write daybooks that contain records of purchase, sales, payments and receipts, and document every financial transaction, whether in credit or cash in the daybook correctly, that is, customer ledger, petty cash, and supplier ledger and also the general ledger. After this, the accountant uses the information that the bookkeeper recorded to generate financial reports.

History

The origin of keeping books is not identified; however, researches that have carried out recently suggest that this method has existed since ancient time. Waste book is a term that was used in America, which referred to documenting transactions daily.

Process

This involves the primary process of recording the effects of financial transactions. The difference between manual and electronic bookkeeping is that manual delays during the recording of the commercial deals, but this is absent in computerized bookkeeping.

It takes almost a month for the summary of the journals totaled to be given. The double-entry rule is used to transfer reviews of the journals to the accounts that they are required to go to.

After the accounts have balanced, there are several changes made by the accountant. These changes must obey the double-entry rule

Single-entry system

The cashbook is the primary single-entry in bookkeeping, which resembles the accounts register, but all entries go to different categories of expense and income accounts. There is a software called do-it-yourself that can is to perform single entry.

Double-entry system

Double-entry has a set of rules that it uses recording information that is financial in the accounting system where each transaction changes nominal ledgers

Daybooks

Daybook is like a diary that keeps records chronologically and descriptive and includes financial records daily. Daybooks include

Sales daybook, this is used for recording sales and invoice

Sales credits daybook used to record transactions on credit notes.

Purchases daybook, this records purchase invoices.

General Journal daybook is used in recording journal entries.

Petty cash book

This is a record of purchases that are small in value, which will be later transferred to the final accounts; a junior cashier does this work. The system that is used in this cashbook is imprest system

Journals

Journals are always recorded in a journal daybook that is general. A journal chronologically keeps records for the financial transactions. A company can maintain its transactions using one journal. 

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