Bookkeeping Basics

Many people probably think of bookkeeping and accounting as the same thing, but bookkeeping is really one function of accounting, while accounting encompasses many functions drawn in managing the financial affairs of a business. Accountants prepare reports based, in part, to the work of bookkeepers.

Bookkeepers perform all manner of record-keeping tasks. Some of them including following:

-They prepare what are referred to as source documents for the operations of a business - the buying, selling, transferring, paying and collecting. The documents include papers such as purchase orders, invoices, credit card slips, time cards, time sheets and expense reports. Bookkeepers also determine and enter in the source documents what are telephoned the financial effects of the transactions and other business events. Those include paying the employees, making sales, borrowing money or buying products or garbage for production.

-Bookkeepers also make entries in the financial effects into journals and accounts. These are two different things. A journal is the record of transactions in chronological order. An accounts is a separate record, or page for each asset with each liability. One transaction will affect several accounts.

-Bookkeepers prepare reports at the end of specific period of time, encompassng daily, weekly, monthly, quarterly or annually. To do this, all the accounts need to be up to date. Inventory records must be updated and the reports checked and double-checked to ensure they are as error-free as it can be.

-The bookkeepers also compile complete listings of all accounts. This is called the adjusted trial balance. While a business may have a hundred or along lines of that accounts, very large businesses can have upwards of 10,000 accounts.

-The final step is to use on the bookkeeper to close the books, which means bringing all the bookkeeping for a fiscal year into a close and summarized.