What is Bookkeeping?
Bookkeeping is the record of accounting books in which bookkeepers record all the transactions made in the business. Firms have to choose an accounting system from a single entry system and double-entry bookkeeping system, in which an accountant needs to prepare financial statements.
Small, medium or big organizations choose from them for bookkeeping but they need the best accounting software so that they can truly record all the transactions without any errors or mistakes at the time of track expenses, and invoices with Best Expense tracker app.
Most of the people who can’t afford this accounting software but they made their financial statement on their own with the use of spreadsheets in the form of single entry or double-entry bookkeeping system.
The meaning of bookkeeping is that the bookkeeper mentions all the transactions by placing the record in the right place. It’s not that the bookkeeper only records the accounts but also the accountant maintains and updates them.
What is good bookkeeping?
Fabulous bookkeeping describes the single transaction of the business firm accurately in the form of any accounting system.
Responsibilities of Bookkeeper
- The first thing that a bookkeeper has is knowledge and love with accounting numbers.
- The first job of a bookkeeper is to analyze all the records properly.
- Creating financial reports daily.
- Proper records of sale and purchase records, income, expenses, and other records needed to keep in financial reports.
- The job is to also make and receive payments from vendors and to customers.
- Daily changes records of banking in financial reports.
- Do proper reconciliation.
- Maintaining a variety of ledgers.
- Bookkeepers should have a quality of organizational skills, handle time management, and be well qualified for bookkeeping.
What does a Bookkeeper do?
The actual work of a bookkeeper is that they provide accurate and relevant information to the accountant so that the accountant can maintain it properly for the future because we maintain the accounts for the future so that we can see any transaction no matter how old it is.
If you keep proper accounts from starting, then your business is equally effective and grows.
It’s not that you can record the transaction anywhere, it puts a lot of impact on the goodwill of the business. To put a strain on the business, you have to hire a professional accountant so that he can use the information given by the bookkeeper properly. For bookkeeping, you can use any kind of accounting software.
When you start a business, at that time you cannot guess where your business will reach and when it will grow but you set a target for how much you have to achieve in a particular time. To meet that target, you have to do bookkeeping well, for that you have to follow the bookkeeping types. so now we will discuss types of bookkeeping.
By keeping in mind the Generally Accepted Accounting Principles, bookkeepers check all the transactions at the end of the year, they are related to the assets, liabilities, expenses, equity, and so on.
Some important note: Some important note: When we start a business, we think our whole business has to be done in cash only because sales on credit contain more risk and possibility of liquidity but still we have to switch our business from cash accounting to the accrual accounting because many customers who like to purchase an on credit because of cash shortage and many reasons. So we want to say that bookkeeping is recorded based on cash and accrual basis of accounting.
Accounts payable and receivable
Account payable refers to that if you can’t make payments due to some reasons or forget to make payments so bookkeeping will remind you because every account payable record in bookkeeping with time, date, and place.
Account receivables refer to that if someone gets goods or services from your business without giving any payment.
In business, you must do most transactions in cash so all the transactions made in cash transfer in cash accounts in ledger accounts.
Inventory refers to goods or services of a company and the company kept this stock for future resale. Inventory stock also records in bookkeeping in which every transaction of the stock sale and purchase is recorded. If you are running a business, you can use Best Inventory management software to track inventory.
Suppose you are a loan for anything like a business, that transaction of the stock is done in loan payable. So this transaction tracks payments and their due dates are recorded.
Sales and purchase
If you are a properly well-qualified entrepreneur, you have to record every sale you have made at any time and track all revenue that you get from a single sale. You should record all the transactions accurately related to the sales. On the other hand, purchases refer to the transaction, suppose you have bought a company’s stock that the purchase record will record in cost of goods sold (COGS) after decreasing from sales as a gross profit.
In business expenses or expenditure, the most important thing is noted in bookkeeping. Other payroll expenses like a tax in business pay to the government. If you are running a business so you need the best payroll software and best expense tracker app.
It also tracks the owner’s fund or owner’s fixed amount of money put into the business and also includes assets showing the amount of money. Owners’ fund is also known as the Owner’s draw.
It also includes the profit earned by the business which doesn’t need to be distributed after the business. The profits describe here the company how much invested and how performed in how much time.