ACCOUNTS & BOOK KEEPING
Bookkeeping means recording the financial transactions and information concerning the business of a company regularly. It is a systematic recording of financial transactions in a company. It ensures that the records of each financial transaction are up-to-date, correct and comprehensive.
The bookkeepers are individuals or entities who maintain the books of account of a company. They manage all the financial data of a company. The companies can track all their financial transactions on their books with accurate bookkeeping. Bookkeeping helps companies to make important investing, operating and financing decisions.
Connection Between Bookkeeping and Accounting
Bookkeeping is a separate process from accounting, which occurs within the broader scope of accounting. The accounts are prepared from the information provided by bookkeeping. A strong relationship between these two functions is necessary to take the business to the next level.
Bookkeeping is a segment of the whole accounting system. Bookkeeping is the basis for accounting as it contains the proper records of all financial transactions whereas, accounting involves organising, summarising, classification and reporting financial transactions.
If the bookkeeping is correct, the accounting of a company will be proper. Thus, accounting is broader than bookkeeping and accounting of a company relies on a proper and accurate bookkeeping system.
Bookkeeping helps to interpret the accounting information for decision making by both the internal and external users. Bookkeeping is a subset of accounting and clerical in nature which involves the following:
- Recording financial transactions
- Posting credits and debits
- Producing invoices
- Maintaining and balancing current account and general ledgers
- Completing payroll