BOOKKEEPING

Bookkeeping is the recording of financial transaction, and is part of the process of accounting in business. It may sometimes interchangeably used as accounting but they are different when it comes to its purpose. Bookkeeping is the crucial first step in accounting process. It includes purchases, sales, receipts, and payment by an individual or an organization. Bookkeeping refers mainly to the record-keeping aspects of financial accounting, and involves preparing source documents for all transaction, operations and other vents of a business.

HISTORY

It was believed that the first double-entry bookkeeping was published by Luca Pacioli, the father of accounting and bookkeeping. Accounting has been around for centuries. It’s a critical part of the business, record-keeping, and life in general. The first record of accounting occurred thousands of years ago in Mesopotamia and has evolved into the intricate element of business and life that it is today.

PROCESS

As we all know, bookkeeping is a recording of all financial activities in a business. Below are the steps on its processing:

1. Prepare source documents for transactions

It is in this step we collate all the receipts, vouchers and hard copies of all the financial activities in the business. This serves as as the source of all transactions.

2. Determine financial effects of transaction

In every transaction it gives out particular effects in the business. Cash in, cash out, income and expenses. It is in this step that the bookkeeper determines the rules or standard in measuring the effects of a certain transaction.

3. Make original journal entries of transaction

With the use of the source documents, the bookkeeper then makes an entry in the journal then into the business accounts. But with the note that only official or established chart of accounts should be used in recording transaction. Journal is a chronological record of transaction – like a very detailed diary. Timely manner and correct data entry is critically important in this step.

4. Prepare adjusted trial balance

After all the end-of-period procedures have been completed, the bookkeeper compiles a complete listing of all accounts, which is called the adjusted trial balance. Modest-sized businesses maintain hundreds of accounts for their various assets, liabilities, owners’ equity, revenue, and expenses

5. Close accounts for the year

Books is the common term for a business’s complete set of accounts. A business’s transactions are a constant stream of activities that don’t end tidily on the last day of the year, which can make preparing financial statements and tax returns challenging.

21ST CENTURY

Bookkeeping have transcend also through time and its importance have been known worldwide, not just to businesses but also with individual. Hardcopies were used but as technology evolved and so with bookkeeping. There are a lot of application where companies and entrepreneurs used in making their bookkeeping and hire online bookkeeper.

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