The term Bookkeeping is derived from the old English word “bokke” which means “book”. Bookkeeping is basically a system of recording and organizing the financial transactions of a business. It helps to track the financial status of a company and also assists in preparing financial statements. There are basically two types of Bookkeeping- manual Bookkeeping and computerized Bookkeeping.
Define Single Entry Bookkeeping
Single Entry Bookkeeping is a type of Bookkeeping in which only one side of the financial transaction is recorded. This is usually done by small businesses and self-employed individuals. Transactions are recorded in a journal, and the total amount of debits and credits are reconciled at the end of the period.
Define Double Entry Bookkeeping
Double Entry Bookkeeping is a type of Bookkeeping in which both sides of the financial transaction are recorded. This is usually done by businesses and organizations. Transactions are recorded in journals and ledgers, and the total amount of debits and credits are reconciled at the end of the period. Double Entry Bookkeeping is considered to be more accurate and reliable than Single Entry Bookkeeping.
Computerized Bookkeeping is a type of Bookkeeping in which the financial transactions are recorded and organized into databases. This type of Bookkeeping is usually used by businesses and organizations that have large amounts of financial data. Computerized Bookkeeping can be done manually or through software programs.
The benefits of Bookkeeping include the following:
- It helps to track the financial status of a company.
- It assists in preparing financial statements.
- It helps to make sound financial decisions.
- It helps to keep track of inventory and assets.
- It helps to detect fraud and irregularities.
- It provides a historical record of financial transactions.
Bookkeeping is an essential part of any business and it should be done accurately and diligently in order to ensure the financial stability of the company. Bookkeepers play a vital role in the success of a business and should have a good understanding of accounting principles and procedures.