What Exactly Does A Bookkeeper Do?

You have a professional team of accountants, so you're probably asking yourself "What does my bookkeeper really do and do I really need one?"

. The answer to the latter question is "Yes, you do". But why? Let's look at it in detail.

Anyone with an undergraduate level education in accounting has probably heard of the double-entry system of accounting, that is that when any accounting detail is done, it needs to balance both on the credit and debit side. This is one of the job duties done by the bookkeeper. For instance, when an item is purchased for credit, you debit to accounts receivable and credit to sales revenue, also you debit the cost of goods sold and credit inventory. Similarly, when the cash is received, you debit to cash and credit to accounts receivable. This can also be done with the payable side. When you purchase goods on credit, you debit to inventory and you credit to accounts payable.

Keeping track of the journal entries is one of the major facets of the bookkeeper.

Another facet involves the closing out of all the temporary accounts at the end of the month. What exactly ARE temporary accounts? They're not the assets, liabilities or equity, but rather all of your revenue and expense accounts. most companies use the accrual basis which matches all revenues when they are earned and expenses when they are incurred. The accrual method requires what is known as a month-end close-outs. All your revenues and expenses are zeroed out and the balance goes directly into your equity account. It's at this time that all your financial statements can be produced: Your income statement, statement of cash flows and your balance sheet, which most people in management want to be sure they see. Also, any inventory adjustments are usually done at the end of the month, for simplicity sake and any overages or shortages are adjusted to the accounts directly. This is the most important part of the bookkeeper's job.

Lastly, the bookkeeper just makes the accountants' jobs easier. When you go for a financial review at the end of the year, the auditor can just look at the financial documents and the evidence and make sure everything matches up. This makes having the information for the IRS and your tax records all that much easier, having a template to work with. When you have the templates, it gives the accountant something to work with.

In conclusion, the bookkeeper is the life blood of your organization, and is an essential part of your business, taking care of the day-to-day operations of the company and giving you reports at the end of the month.

by: George Jones

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