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Bookkeeping is a task concerned with the recording of financial data relating to business operations in a significant and orderly manner. It envelopes all the procedural aspects of accounting work and embraces record-keeping function. In this article, we have discussed the list elements of bookkeeping and instance of entries which becomes part of bookkeeping.
Bookkeeping procedures are governed by the end product, the financial statements. And ‘financial statements’ includes Profit and Loss Account and Balance Sheet including Schedules and Notes forming part of Accounts.
Elements of Bookkeeping |
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Journals |
In the system of Bookkeeping, the journals are the first place you can look to find complete information about a transaction. The general journal, used by many businesses that employ a double-entry accounting system, records the debit and credit amounts for each account as transactions occur. It may also list a short description of the transaction. For example, some businesses may have specialized journals, each for recording a specific kind of transaction depending on their needs |
Ledgers |
Ledgers group transactions according to account and the effect it has on the business. Such grouping or categories in the ledger may include assets, liabilities, expenses and revenue. Transactions from business journals get posted or recorded to the ledgers periodically. And with the help of ledgers, the financial position of the business can be easily ascertained as well. |
Financial statements |
They communicate the essential information about the financial situation of a company to outside parties. Most bookkeeping software uses four major financial statements.
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Essentially, bookkeeping means recording and tracking the numbers involved in the financial side of the business in an organized way. It is essential for businesses but is also useful for individuals and non - profit organizations.
Any transaction, whether it is a question of purchase or sale, must be recorded. And the person(s) responsible for bookkeeping for business would record all transactions that are related. The following are some examples of entries which forms part of bookkeeping.
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