BUSINESS STUDIES, Bookkeeping

bookkeeping

Bookkeeping is the recording of all financial transactions, and is part of the process of accounting in business. There are several methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system, but, while they may be thought of as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.

process of bookkeeping

Bookkeeping records are entered into books called books of prime entry and ledger accounts. Together they will provide a complete record of every transaction a business has and every $/kr it has earned and every $/kr it has spent or owes to other people and organisations.

THE PROCESS OF WRITING UP THE BOOKS

Everyday - Business documents are issued and received At the end of each day - Details are recorded in date order in the books of prime entry At the end of each week or month - Journal entries are posted to ledger accounts

Accounting

Accounting is the skill and process of using bookkeeping records of a business to prepare financial statements about its financial health and performance. It involves planning, recording, analyzing, and interpreting financial information. In simple terms, bookkeeping is the first step in an accounting system of a business.

double-entry bookkeeping

Recording all transactions in two places so you can check one list of transactions against the other for accuracy.

BOOKS OF PRIMARY ENTRY - JOURNALS

The record of invoices, receipts, checks and other documents showing business transactions are entered into books known as journals in the date order. A business might have several journals such as purchases journal, sales journal, cash book, general journal, etc. These days its computer program who take care of all these different journals/ledgers simultaneously.

Ledger

The records from books of primary entries (journals) are transferred periodically into more organised form to make accounts more systematic into the ledger. Usually a business will open and maintain a seperate account in its ledger for each type of asset it owns, each expense it incurs and so on.

transactions

Transactions include purchases, sales, receipts, and payments by an organisation with different customers and suppliers.