Basics and Tasks in Bookkeeping

Most people may think that Bookkeeping and accounting are just one and the same; although the two terms may be closely associated with each other, bookkeeping is still different from accounting. By definition, Bookkeeping is the recording of a business's transactions into the accounts contained in the general ledger. Usually, it is associated with the accounting tasks before the trial balance is prepared. Bookkeeping is but a function, a part of accounting's big whole. Accounting, on the other hand, encompasses many different functions covering the business's financial affairs. The reports prepared by accountants are actually based from, in part of, the bookkeepers' work. Accountants prepare reports based, in part, on the work of bookkeepers.

Bookkeepers basically do all record-keeping activities, some of which include the following:

Preparation of documents. Bookkeepers prepare what are known as source documents for all operations that a business undertakes. These operations range from buying, selling, payment, collection, transfer, etc. Papers such as invoices/receipts, purchase orders, credit card memos, time cards and sheets, expense reports and many more constitute these source documents. Bookkeepers also measure and note in the source documents what are known as financial and enter in the source documents what are called the financial effects of the business's transactions and other related activities, which include payment of employees, purchasing of supplies or raw materials for the production process, sales generation as well as borrowing money.

Recording entries. Bookkeepers record entries of the business's financial effects through journal entries or into the general and subsidiary ledger accounts. Journal entries and ledger accounts are two entirely different things. A journal is a chronological record of the business's transactions while the accounts has separate records for every asset or liability.

Preparation of timely reports. All records and accounts should constantly be updated and double checked by bookkeepers in order to prepare reports usually at the end of a given period. It could be daily, weekly, monthly, quarterly or yearly. bookkeepers must properly check these records to avoid faulty error in making the reports.

Compilation of account listings. Bookkeepers prepare the complete list of the business's records and accounts, which is also known as adjusted trial balance. Small businesses usually have a hundred accounts or so while large-scale companies can have more than ten thousand accounts.

Closing of the books. This is the final step in bookkeeping wherein the bookkeeping activities for the fiscal year are brought to a close and are summarized.

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