Bookkeeping

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Bookkeeping (also commonly referred to as book-keeping, book keeping or bookeeping) is the recording of all financial transactions undertaken by a business (or an individual). A bookkeeper (or book-keeper), sometimes called an accounting clerk in the US, is a person who keeps the books of an organization. The organization might be a business, a charity or a local sports club. Two methods are widely in use: single-entry accounting system and double-entry bookkeeping system.

The system most commonly used in bookkeeping is the double-entry bookkeeping system. A bookkeeper is usually responsible for writing up the "daybooks". The daybooks consist of purchase, sales, receipts and payments. The bookkeeper is responsible for ensuring that all transactions are recorded in the correct daybook, suppliers ledger, customer ledger and general ledger. The bookkeeper will bring the books to the trial balance stage for a financial accountant. This accountant will prepare the profit and loss statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.

Bookkeeping can also consist of simply listing payments on a page, e.g. recording deposits received from people (single entry bookkeeping).

Bookkeeping is an essential part of any business. Without bookkeeping no accounting information can be compiled. Bookkeeping is the first level of financial data gathering.

[edit] Manual bookkeeping system

Books, daybooks, and ledgers are the mainstay of manual entry bookkeeping. The picture of a person leaning over a big leather bound ledger, with an ink quill pen in their hand, portrays the historical image of the bookkeeper performing their bookkeeping entries. The painstaking accuracy required to ensure that a bookkeeping system was kept properly may have attracted the type of person who was unfairly portrayed as "boring" or a perfectionist. The skillset required to be a bookkeeper requires accuracy and perfectionism. A knowledge of debits and credits ensured that the bookkeeper understood how any financial transactions would affect the financial presentation of a company's accounts. An invoice received or a cheque paid out were recorded in the correct daybooks by the bookkeeper and transferred to the relevant nominal ledger account.

[edit] The computerisation of bookkeeping

The computerisation of Bookkeeping has removed many of the "Books" that were used to record transactions. Computer software has de-skilled the job of a bookkeeper and opened it up to more people. The software ensures that no entries are omitted from the ledger by performing the automatic double entry of every transaction. Computer software has also improved the speed at which the bookkeeping can be performed.

Online bookkeeping is a new chapter in the field of bookkeeping, where source documents and data reside in web-based applications which allow remote access to bookkeepers and accountants.