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What is Bookkeeping?

Definition: The recording of a company’s transactions into accounts which organize and manage all business transactions in a company.

Bookkeeping involves the recording of financial transactions and other information related to the business on a day-to-day basis.

The most important aspect of bookkeeping is to keep an accurate account of all records and keep them up to date. Accuracy is the most vital part of the bookkeeping process.

Bookkeeping is constructed to provide the preliminary information needed to create accounting statements. Each transaction must be recorded in the books, and any and all changes must be updated on a continuous basis.

Double-entry Bookkeeping

This bookkeeping system refers to a set of rules to record financial information where every transaction must impact at least two different accounts.

This is done using debits and credits, and is used as a type of error-detection system. If, at any point the total sum of debits does not equal the sum of credits, an error has occurred somewhere in the records.

 

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