Bookkeeping

recording and picking up business transactions

Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, and payments by an individual or organisation.[1] The persons who do this job are called bookkeepers. They use one of several methods, such as single-entry and double-entry bookkeeping. With proper bookkeeping, companies are able to track all information on its books to make key operating, investing, and financing decisions. Proper bookkeeping gives companies a reliable measure of their performance. It also provides information to make general strategic decisions and a benchmark for its revenue and income goals.

Types of Bookkeeping system[2]Edit

Single Entry BookkeepingEdit

  • The single entry system of bookkeeping requires recording one entry for each financial activity or transaction.
  • Single entry bookkeeping system is a basic system that a company might use to record daily receipts or generate a daily or weekly report of cash flow.

Double Entry BookkeepingEdit

  • The double-entry system of bookkeeping requires a double entry for each financial transaction.
  • The double entry system provides for checks and balances by recording a corresponding credit entry for each debit entry.
  • The double-entry system of bookkeeping is not cash-based. Transactions are entered when a debt is incurred or revenue is earned.

ReferencesEdit

  1. "What is Bookkeeping?". Corporate Finance Institute. Retrieved 2021-09-13.
  2. "Types of Bookkeeping System – Objectives and Methods | Tally Solutions". Tally. 2019-11-28. Retrieved 2021-09-13.