Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, income, and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Bookkeeping should not be confused with accounting. The accounting process is usually performed by an accountant. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper. There are some common methods of bookkeeping such as the Single-entry bookkeeping system and the Double-entry bookkeeping system. But while these systems may be seen as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process.
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A bookkeeper (or book-keeper), also known as an accounting clerk or accounting technician, is a person who records the day-to-day financial transactions of an organisation.[1] A bookkeeper is usually responsible for writing the "daybooks." The daybooks consist of purchase, sales, receipts, and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct daybook, suppliers ledger, customer ledger, and general ledger. The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
Two common bookkeeping systems used by businesses and other organizations are the single-entry bookkeeping system and the double-entry bookkeeping system. Single-entry bookkeeping uses only income and expense accounts, recorded primarily in a revenue and expense journal. Single-entry bookkeeping is adequate for many small businesses. Double-entry bookkeeping requires posting (recording) each transaction twice, using debits and credits.[2]
The primary bookkeeping record in single-entry bookkeeping is the cash book, which is similar to a checking (chequing) account register but allocates the income and expenses to various income and expense accounts. Separate account records are maintained for petty cash, accounts payable and receivable, and other relevant transactions such as inventory and travel expenses.
Sample revenue and expense journal for single-entry bookkeeping[3]
| No. | Date | Description | Revenue | Expense | Sales | Sales Tax | Services | Inventory | Advert. | Freight | Office Suppl | Misc |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 7/13 | Balance forward | 1,826.00 | 835.00 | 1,218.00 | 98.00 | 510.00 | 295.00 | 245.00 | 150.00 | 83.50 | 61.50 | |
| 1041 | 7/13 | Printer- Advert flyers | 450.00 | 450.00 | ||||||||
| 1042 | 7/13 | Wholesaler - inventory | 380.00 | 380.00 | ||||||||
| 1043 | 7/16 | office supplies | 92.50 | 92.50 | ||||||||
| -- | 7/17 | bank deposit | 1,232.00 | |||||||||
| - Taxable sales | 400.00 | 32.00 | ||||||||||
| - Out-of-state sales | 165.00 | |||||||||||
| - Resales | 370.00 | |||||||||||
| - Service sales | 265.00 | |||||||||||
| bank | 7/19 | bank charge | 23.40 | 23.40 | ||||||||
| 1044 | 7/19 | petty cash | 100.00 | 100.00 | ||||||||
| TOTALS | 3058.00 | 1,880.90 | 2,153.00 | 130.00 | 775.00 | 675.00 | 695.00 | 150.00 | 176.00 | 184.90 |
Simple bookkeeping for individuals and families involves recording income, expenses, and current balance in a cash record book or a checking account register.
Sample checking account register (United States, 2003)[4]
| AD=Automatic Deposit, AP=Automatic Payment, ATM=Teller Machine, DC=Debit Card | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| NUMBER OR CODE |
DATE | TRANSACTION DESCRIPTION | PAYMENT AMOUNT | / | FEE | DEPOSIT AMOUNT | BALANCE | |||
| balance forward | 1331 | 85 | ||||||||
| AD | 3/15 | paycheck | 1823 | 56 | 3155 | 41 | ||||
| AP | 3/26 | electricity | 104 | 31 | 3051 | 10 | ||||
| 704 | 3/26 | car registration | 58 | 50 | 2992 | 60 | ||||
| ATM | 3/30 | cash withdrawal | 100 | 00 | 1.00 | 2891 | 60 | |||
| DC | 4/2 | groceries | 127 | 35 | 2764 | 25 | ||||
A daybook is a descriptive and chronological (diary-like) record of day-to-day financial transactions also called a book of original entry. The daybook's details must be entered formally into journals to enable posting to ledgers. Daybooks include:
A petty cash book is a record of small value purchases usually controlled by imprest system.
A journal is a formal and chronological record of financial transactions before their values are accounted in general ledger as debits and credits. If daybooks are not kept, the journals are books of original entry, where the transactions are first recorded, hence often considered synonymous with daybooks. Special journals include: sales, purchases, cash receipts, cash disbursements, and payroll. A general journal is a record of the entries not included in other journals.
A ledger (also known as a book of final entry) is a record of accounts, each recorded individually (on a separate page) with its balance. Unlike the journal listing chronologically all financial transactions without balances, the ledger summarizes values of one type of financial transactions per account, which constitute the basis for the balance sheet and income statement. Ledgers include:
A chart of accounts is a list of the accounts codes that can be identified with numeric, alphabetical, or alphanumeric codes allowing the account to be located in the general ledger.
Computerized bookkeeping removes many of the paper "books" that are used to record transactions and usually enforces double entry bookkeeping. Computer software increases the speed at which bookkeeping can be performed.
Online bookkeeping allows source documents and data to reside in web-based applications which allow remote access for bookkeepers and accountants. All entries made into the online software are recorded and stored in a remote location. The online software can be accessed from any location in the world and permit the bookkeeper or data entry person to work out of an office. The paperwork can either be delivered to the bookkeeper, or a company can scan its business documents and upload them to a secure location or into an online bookkeeping application on a regular basis. This allows the bookkeeper to work remotely with these documents to update the books. Users of this technology include:
Popular examples include FreshBooks, Blinksale and Simplybill.
| US English | Int. English |
|---|---|
| Check | Cheque |
| Checking Account | Current Account |
Footing and cross-footing are bookkeeping terms for summing a table of numbers by column (down) and by row (across), respectively. Other names for these terms are casting and cross-casting as well as totting and cross-totting.
stock | retire | vm
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