Bookkeeping - What is bookkeeping?
Bookkeeping is the systematic recording and organising of financial transactions in a company
Starting and maintaining solid, professional accounting practices is essential for the growth of a business. Make sure yours are in order with Debitoor.
Bookkeeping is the recording, on a day-to-day basis, of the financial transactions and information pertaining to a business. It ensures that records of the individual financial transactions are correct, up-to-date and comprehensive. Accuracy is therefore vital to the process.
Bookkeeping provides the information from which accounts are prepared. It is a distinct process, that occurs within the broader scope of accounting.
Each transaction, whether it is a question of purchase or sale, must be recorded. There are usually set structures in place for bookkeeping that are called ‘quality controls’, which help ensure timely and accurate records.
In principle, transactions must be recorded daily into the books or the accounting system.
For each transaction, there must be a document that describes the business transaction. This could include a sales invoice, sales receipt, a supplier invoice, a supplier payment, bank payments and journals.
These accompanying documents provide the audit trail for each transaction and are an important part of maintaining accurate records in the event of an audit.
The double entry system of bookkeeping is based on the fact that every transaction has two parts, which therefore affects two ledger accounts.
Every transaction involves a debit entry in one account and a credit entry in another account. This serves as a kind of error-detection system: if, at any point, the sum of debits does not equal the corresponding sum of credits, then an error has occurred.
Bookkeeping and Debitoor
Say goodbye to tedious books and ledgers. With a cloud-based accounting system like Debitoor, it’s easy to record income, expenses, and use automatic bank reconciliation to make sure your credits equal your debits.