What is Bookkeeping?
Bookkeeping is a subset of Accounting.
Accounting involves a process.
The Accounting process involves a series of steps which include analyzing, recording, summarizing, reporting, reviewing, and interpreting financial information.
In the simplest of terms, Bookkeeping is PART of the Accounting process and involves recording and classifying a business's financial transactions in a usable form.
Bookkeeping forms the foundation on which the accounting system is built and therefore all bookkeeping information should be complete, accurate and timely.
The complexity of a bookkeeping system often depends on the size of the business and the number of transactions that are completed daily, weekly, and monthly.
Who are Bookkeepers?
The individuals responsible for the Bookkeeping functions in Accounting are called Bookkeepers.
In many organizations, Accountants usually plan and set up the accounting system and hand it over to bookkeepers.
Bookeepers then record Financial Transactions on a day to day basis and keep records which are backed up by valid documentation.
It is the Bookkeepers job while recording financial information in the accounting system to maintain adherence to accounting principles.
The different stages in an accounting process is called the accounting cycle and Bookkeepers usually bring transactions upto the trial balance stage at which point the accountants take over to prepare the Financial statements.
If it wasn't for the hard work of bookkeepers, companies wouldn't have a clue about what is happening with their financial transactions.
The information that Bookkeepers track help owners make key decisions about sales planning, product offerings and other financial aspects of their business.
Bookkeeping needs to be accurate, keep complete records and be extremely confidential.
Testing, learning and improving happens from tracking measurable results to see what works and what doesn't.
So, if you are staring a business or ever plan to start a business, Bookkeeping needs to become your best friend so DON'T shortchange it.
Take the time to develop your bookkeeping system with your accountant before you even open you business doors and make your first sale.
Where do I go from here?
If your wondering what to learn next - The Difference between a Bookkeeper and Accountant would be a great article to read OR just check out whatever you like on the Search box on top of the page.
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