Book Keeping

Book Keeping

Bookkeeping is a basis for the accounting process. Bookkeeping is the process of recording, analysing and interpreting the financial transactions of a individual or business on daily basis in a systematic way. Bookkeeping is part of the full accounting process, it gets the business accounts ready starting from the initial entry of financial transactions, all the way to filing tax returns, and for the preparation of year end accounts by an Accountant.

A bookkeeper's duty is to record each and every transaction of the day in a book or journals. A bookkeeper records the financial transactions in such a way that it gives a clear picture of activities performed inside a business unit.

The common practices of bookkeeping records are:

1. Record the receipts from customers
2. Record the payments to suppliers
3. Record the billing of the products supplied
4. Record the invoices from suppliers
5. Record the depreciation and other adjustment

Bookkeeping

Purpose Of Bookkeeping :

From small scale to large scale industries, depending on their nature of business, a few or a various number of transactions are involved everyday. In over a time it becocomes difficult to keep a track of all those transaction. Bookkeeping helps in organizing the data logically for its easier usability. It further helps the individual or a business owner to study, analise the pros and cons of the business and take decisions to fix the issue. Bookkeeping is done also to:

1. Understand the financial value of each and every transaction
2. Identify the factors responsible for profit or loss of a particular period, so he can take action to fix it.
3. Maintain the correct flow of the purchase and sales
4. Calculate the tax liability

Types of Bookkeeping

There are two types of bookkeeping

Single entry method
The single entry system BookKeeping is commonly practiced for small businesses. In single entry system only receipts, payments, purchases and sales are recorded and maintained. Inventory, Capital and others details are recorded as notes and information.
Double entry method
Double entry method BookKeeping is more complex bookkeeping system, which includes cash books, accounts payable and receivable, tracking of loans, inventory, payroll, journal entries, ledgers and trial balances. Here using the idea of debit and credit, every transaction is recorded twice: what is received (debit) and what is given up (credit). This is the standard method of bookkeeping used by bookkeepers and accountants.

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