As the name indicates, bookkeeping is the recording of business transactions in the books of accounts. In simple words, it is the posting of transactions in accounts. In the coming paras, my readers will learn how this process of recording the numbers work.
Books of accounts
Accounts are of five types. You may also say these categories. A bookkeeper posts transactions in ledgers of assets, liabilities, equity, income and expenses in accordance with the accounting principles. Closing balances of assets, liabilities and equity are reflected in the balance sheet. Whereas, income and expenses prepare income statement(s) together with.
Maintaining accounting records
In addition to transaction posting, bookkeeping covers the maintenance of accounting records such as cash books, petty cash vouchers, fixed assets registers, accounting files, individual accounts etc. It also includes keeping the records up to date.
Reconciliation
A bookkeeper also tracks a ledger posting. On a regular basis, he also reconciles general ledger with day books and individual accounts. That’s all the bookkeeping which I narrated in preceding paras.
Link with accounting
In fact, the process of bookkeeping is the part of accounting. Accounting is the recording, classifying, reporting and summarizing information of financial nature. It is a whole systematic approach to present figures on the face of financials. Without accurate bookkeeping, an accountant can’t come up with optimum planning.
Conclusion
Summing up my lines, bookkeeping is the posting, recording and maintaining the transactions in books of accounts. A good bookkeeper makes the work easy for an accountant. So, the accounting function can make informed decisions. They can do better financial planning.
This basic article covers the whole tasks of a bookkeeper in simple words. In my other articles I am penning the advanced concepts of accounting.
Stay tuned to my website.
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