Accounting can be determined as a giant science, where everyday new things and innovations appear to make it even simpler…or more complex to some of you. Of course, if you are new in these things, it might be quite difficult for you to understand each accounting detail or term immediately. Though, there is not scary about accounting at all. All you need to do is to read and learn. Today, we are about to discuss one specific element in accounting job. It is called bookkeeping and even though you have already heard about it before, better forget everything you have learnt up to know, because there is a big chance for you to be mislead in most of the existing explanations about it. Here is the bookkeeping guide for dummies that will crystallize this term for you in no time!
The Definition of Bookkeeping
Bookkeeping is a part of accounting job. This means that both do not re-cover. On the contrary – there are plenty of other tasks an accountant is supposed to do, except for the bookkeeping. The bookkeeping, itself, is an especially detached pack of operations that concern a certain part of accounting in general. The person, who is charge for the bookkeeping process either in a company, or in his own little family firm, is the bookkeeper. The main job that the bookkeeper does is to record all of the financial transactions that concern the business unity.
Bookkeeping incorporates purchases, sales, receipts, payments and other similar documents or process that an individual or an organization performs directly for or to your company. To manage the bookkeeping process finely, the bookkeeper has day books, where all of these transactions and recordings are strictly filled day by day. The main responsibility you have as a bookkeeper is to follow whether each of these financial transactions is firstly done, and secondly – performed correctly. This refers to the results of all the recordings and transactions made in a day or other periods in some cases. After the check and the filling of the daybook are done, the bookkeeping process ends up with reports. These reports practically revise the entire process and finish with conclusions, remarks or plans for the next day. Finally, all of these reports are important for the trial balance stage.
Variations of Bookkeeping Approaches These Days
Many people believe that accounting is something an ugly glasses-wearing woman does by hand every single day before ending up her work, while bookkeeping is the same process, but performed on an electric device with a specially tailored accounting system. This statement is 50% right and 50% wrong. Accounting and bookkeeping can be done, though, with both of these approaches. This is how bookkeeping (and accounting, too) has advanced with years, but not a distinguishing border between the general procedure and its separate element. Bookkeeping used to be done by hand – writing the records and checking the financial transactions on paper and paper daybooks – but today, many IT companies are generous enough to offer accountants modern bookkeeping software, which simplifies the entire process. Still, in difference to some of the accounting tasks, bookkeeping falls into a risky group, while being done via machine. Machines do make mistakes and can miss a transaction that is not listed at all, which eventually brings the bookkeeping process to a failure. So, regardless it is nowadays modernized and simplified with software products, bookkeeping should be also checked out personally, too!
Bookkeeping is an accounting type of a process that aims security and strict following of all the financial transactions in a company. It is a must for a business to include such a department or at least a person, who can manage this process!