What is Bookkeeping?
Bookkeeping is the part of the accounting responsible for collecting, classifying and recording in chronological order the commercial operations carried out by the company, using the books stipulated in the current regulations.
Bookkeeping is to keep the accounting books, prepare them, organise them and have them available to the company when you need them. This accounting practice is essential for the growth and maintenance of a business.
Purpose of bookkeeping
The goal of bookkeeping is to achieve one of the purposes of accounting, which is to chronologically record the economic facts of the company. Through it they can register, capture, print in a physical book or in a electronic medium, the financial events that take place.
Bookkeeping allows the company to have available accounting and economic information over time, to be consulted, to be used in the preparation of reports, studies, analysis, and most importantly, to be used as a tool for making of decisions.
Principles of bookkeeping
- Transaction records
All transactions that take place within the organization must be recorded daily in the books or in the accounting system.
For each transaction there must be a document describing the business transaction.
- Double entry system
This accounting system states that each accounting transaction has a positive entry and a negative entry (Debit and Credits). Since each transaction has two parts, it affects two accounts.
The main rule of this principle is to debit the receiver and credit the giver.
Means Used By Bookkeeping
- Original documents of the commercial operations. Invoices, receipts, cash vouchers, checks, bills of exchange or drafts, contracts, insurance policies, etc.
- The accounts, where these business operations are summarized and classified.
- Main or compulsory books: Inventories, Daily and Major.
- Auxiliary books. Used by merchants according to the needs of the company.