What is Bookkeeping

What is Bookkeeping? This seems to be a simple question but do you know what actually a bookkeepers does? BOOKKEEPING involves the recording, storing and retrieving of financial transactions for a company, nonprofit organization, individual, etc. Bookkeeping requires knowledge of debits and credits and a basic understanding of financial accounting, which includes the balance sheet and income statement. 

Common financial transactions and tasks that are involved in BOOKKEEPING include:

·        Raising invoices for goods sold or services provided to clients

·        Recording receipts from customers.

·        Verifying and recording invoices from suppliers.

·        Payment to the suppliers

·        Processing salaries and wages and related governmental reports.

·        Monitoring Individual Accounts receivable to check the credibility and follow-up.

·   Recording  day to day cash and credit expenses as well as non-monitory adjustments like depreciation

·        Providing Financial and other form of reports as asked by the senior authority.

It’s a digital world so the answer to the question what is bookkeeping has changed, bookkeeping has advanced from traditional methods of maintaining large amount of books to minimization of manual books with the assistance of computer software. There are many accounting software for example, QuickBooks (from Intuit), Xero  and many more which are  low-cost bookkeeping and accounting software package that is widely used by small businesses  throughout the world. Large companies need more advanced software like SAP, Oracle which can provide multiple functions and facilitates quick communication of data across the different departments of the company.

Difference Between Bookkeeper and Accountant

The terms “Bookkeeper” and Accountant” can be interchanged to a certain degree. Many bookkeepers get their begin acting as a data-entry clerk or entry-level bookkeeper for a trade and grow, by way of expertise and advantage, into being a go-to individual for the everyday financial recording. The term “bookkeeper” is pretty literal: The bookkeeper maintains the books and retains documentation for transactions.

An experienced or licensed bookkeeper may finally move into being an ACCOUNTANT (the terminology and principles on what a bookkeeper are allowed to do and call themselves, may be dictated by way of state accounting boards). An accountant might also focus on reporting, business analysis and processes, and very likely advice. Typically a bookkeeper and accountant work in tandem, with the bookkeeper working as a “toes on the ground” legitimate, promoting a stronger relationship between an accountant and a business proprietor. Both bookkeepers and accountant can have certification according to the country specific rule but the generally accountants holds higher position than the bookkeepers do.

To conclude this post What is bookkeeping, I would like to use simple phrase that bookkeeping is a art of maintaining the business transactions.