course bg
EduPristine>Blog>Bookkeeping Basics – Introduction

Bookkeeping Basics – Introduction

December 17, 2014

Bookkeeping Basics:

Bookkeeping is the process of recording of financial transactions, and is part of accounting in business. Such transactions include any of and all purchases, sales, receipts and payments by or to an individual or organization. Anyone who handles this process is referred to as “Bookkeeper”. The accountant then uses the information from the financial transactions recorded by the bookkeeper to create reports such as balance sheets and files forms with government agencies (Now you see why this is fundamental of Accounting Basics!). As such there are many ways of bookkeeping, after all it is about recording the financial transactions but single-entry bookkeeping system and the double-entry bookkeeping system more common methods of bookkeeping.

Bookkeeping Basics: The Process

There are generally 5 steps in the bookkeeping process:

  1. File away all the original paperwork of the transaction that has occurred (Invoice, credit note, receipt etc.)
  2. Details from this original paperwork are recorded in the “original books of entry”. Cash book, purchases book, sales book, petty cash book or sales returns book etc. are examples of such records.
  3. The details from this are transferred to the ledger which is the main book of accounts which records all debits and credits in the business operations.
  4. A trial balance can be made when required by adding the debit column and adding the credit column, and comparing the two additions to determine the current state of financial affairs.
  5. The ledger is used to prepare a set of final accounts at the end of a given period…normally at the end of each financial year. These final accounts include such things as a Profit and loss account, a Balance sheet and a Trading account. These accounts may be necessary for taxation or other purposes.

In our next article we will discuss the bookkeeping entry systems and explore the terms we have encountered in this article in greater detail.

About Author

avatar EduPristine

EduPristine is a member of Adtalem Global Education (NYSE: ATGE), a global education provider headquartered in the United States. Adtalem is a 3 billion dollars (20,000 crores) company that has about 9 institutions and companies with more than 16,000 employees spread across 145 locations. Adtalem takes pride in training 142,000 degree-seeking students all over the world.The organization's purpose is to empower students to achieve their goals, find success and make inspiring contributions to our global community. EduPristine is one of India's leading training providers in Analytics, Accounting, Finance, Healthcare, and Marketing. Founded in 2008, EduPristine has a strong online platform and network of classrooms across India and caters to self-paced learning and online learning, in addition to classroom learning


Interested in this topic?

Our counsellors will get in touch with you with more information about this topic.

* Mandatory Field

Post ID = 68931