BOOKKEEPING

 1.2 Bookkeeping

Bookkeeping is a component of accounting. It is the vital first step in an accounting process. Bookkeepers are responsible for maintaining a record of all transactions entered into by a business. Bookkeepers enter the transactions into the accounting system to produce an accurate and complete record of the financial transactions of a business. 

Businesses of all types and sizes have a bookkeeping system for recording the financial details of their business transactions on an ongoing basis. The system is designed to produce reports to explain the financial performance of a business on a regular basis. The bookkeeping records of a business are often referred to as the accounts of the business. 

The bookkeeping system is used to record the financial transactions of the entity using a technique called double entry bookkeeping. The term double entry refers to the fact that all entries are usually recorded in two locations in the system. This will be explained in more detail later in this text. 

Functions of a bookkeeper 

These include: 

• Producing sales invoices to send to customers;
• Recording financial transactions (including sales invoices and all invoices received from suppliers);
• Entering the transactions into the accounting records. This can be described as posting debits and credits*.
• Maintaining and balancing the general ledgers* and any supporting ledgers and records.
• Complying with controls set up to ensure the completeness and accuracy of the information recorded.
• Preparing a trial balance* as a step in the preparation of financial statements.