Bookkeeping For Beginners

Bookkeeping is the recording of financial transactions

. Transactions include sales, purchases, income, and payments by an individual or organization. Bookkeeping, commonly referred to as keeping the books, is the process of keeping full, accurate, up-to-date business records. Proper bookkeeping can help businesses effectively manage cash flow, stay abreast of profits and losses, and develop plans for the future based on financial trends. It also be define Systematic recording of financial aspects of business transactions in appropriate books of account.

Bookkeeping involves the systematic recording of the financial transactions and the maintenance of the correct & up-to-date financial records of the organization by an accountant clerk. Organization can be a business firm, charitable institute or even an association of sports. Effective management of the Bookkeeping makes the business owners acutely aware of the losses and the profits.

There are some common methods of bookeeping such as the Single-entry bookkeeping system and the Double-entry bookkeeping system.

Single entry bookkeeping denotes that all the transactions are to be entered only once in the account system. It keeps the record as regard with the flow of the income & expenses. This system is quite useful for the persons who have just commenced on the region of a business. The primary bookkeeping record in single-entry bookkeeping is the cash book, which is similar to a checking (chequing) account register but allocates the income and expenses to various income and expense accounts. . These days, single entry bookkeeping can be done with DIY bookkeeping software to speed up manual calculations. The single bookkeeping method records entries once and is an accounting method much like they way people record checks and deposits in a checking account register.

The double-entry bookkeeping system was started in 13th century and refers to a set of rules to record financial information in a financial accounting system wherein every transaction or event impacts at least two different accounts. The double-entry accounting method is used by most businesses throughout the world. Double entry bookkeeping implies that all the transactions are to be entered twice in the account system. It includes all the information regarding the cash on hand, equity in building, equipments, loans, mortgages, profit & loss sheet and cross-checking of all the entries. This system gives the complete picture of a business as it reflects on all the initial investments unlike in the method of a single entry. The purpose and goal of double-entry bookkeeping is to enter financial transaction records so that when financial statements and reports are run, the company's assets are equal to its liabilities plus owners' equity.

by: alona Rudnitsky

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