A Quick Guide to Bookkeeping
Bookkeeping is that part of the accounting cycle where day to day transactions are recorded. Bookkeeping is an essential documentation of financial transactions of a business. Every company's financial system starts with a bookkeeping process may it be the manual process or the automated process.
It is done by either a bookkeeper or an accountant. For those who are self-employed, they do the bookkeeping themselves in order to save costs. But for big companies, they either maintain a whole accounting department with a team of bookkeepers or they have it outsourced to an accounting firm.
There are also available accounting software that address the bookkeeping concerns of businesses. Basic data input into the software will lead to an automatic generation of a financial statements. Financial statements include the balance sheet, income statement, cash flow, and statement of changes in equity. Through a readily available financial statement, management is able to decide quickly and accurately.
In addition to accounting software, there are also online
simple accounting software
available. These online services may be accessed through the use of smartphones any time and anywhere. This may also be linked to existing and relevant systems used by the company.
Bookkeeping has two entry systems and these are the single entry system and the double entry system. Bookkeeping also means maintaining several ledgers and journals such as the general journal, sales journal, cash journal, a petty cash journal, etc.
also means having to keep an accurate, standard and updated chart of accounts. A chart of accounts is where you can find account names for every transaction such as cash, account receivables, account payable, cost of goods sold, and the like.
Bookkeeping may seem simple but it is actually technical. A bookkeeper should know how to classify each transaction and must be able to record it correctly in the correct journal with the correct entries. Daily financial transactions that are inaccurately recorded may lead to either an overstatement or an understatement in a business' financial status. Or it may simply lead to an inaccurate financial statement which no business owner or manager wants.
A basic qualification for hiring a bookkeeper is the educational background which must either be that of accounting or financial management. Fresh graduates who are under board usually settle for the bookkeeping job until they have their licenses. They are the best candidates for bookkeepers since they have been doing bookkeeping in their college or university as part of their degree requirements. Check out
to learn more about bookkeeping.