Bookkeeping is the process of recording sales, purchases and other financial activities by an individual person or by the entire organization. Bookkeeping handles all records such as sales, receipts, payments, accounts receivables, etc. The bookkeeper is the one who conducts bookkeeping activities. And the bookkeeper is the one who makes sure that all transactions are recorded properly in the ledger. There are two processes that a bookkeeper needs to understand: single entry and the double entry processes.
A bookkeeping business might need to learn to use the single-entry and double-entry bookkeeping systems. The single-entry bookkeeping system is not as common as the double-entry system, but you never know when a company may prefer that their books are handles this way. The main thing to remember about double-entry accounting services is that you’ll need to record a debit and a credit for each transaction.
Some important bookkeeping items include the petty cash book, journals, ledgers, and charts of accounts. The petty cash books are records on small item purchases such as fare expenses, meal expenses, and many more. The journal is the chronological record of all financial transactions before they are transferred to the general ledgers. The ledger contains all the accounts taken from the journal entry and then adds the total account which is later on transferred to the balance sheet and income statements. There are three kinds of ledger books that are used in the bookkeeping business. The sales ledger that deals mainly with the accounts receivable that involves financial transactions conducted by the customers to the organization. Another ledger is the purchasing ledger that deals with the accounts payable done by the firm and lastly the general ledger that records all assets, liabilities, income, costs, and expenses. The charts of accounts contains the codes used in the accounts located on the general ledger.
However with the invention of technology, the bookkeeper also uses computerized accounting software that reduces the bulk of manual papers and it is typically a double entry bookkeeping system. Online bookkeeping software is also emerging today because of the use of internet technology. It allows all the data to be accessible through a web based bookkeeping applications.
Owning your own bookkeeping business is an exciting venture for a person who loves to deal with numbers because it involves recording accounts and other financial matters incurred by the company and their customers.