Purpose of bookkeeping and accounting how to#

Accounting and bookkeeping similarities and differences, and how to determine which to hire.As a business owner, it’s important to know the difference. While these financial roles share common goals, they support different stages of the accounting process. purchase book, purchase return book, sales book, sales return book, cashbook, journal, etc., posting the same to the ledger and finally preparing a trial balance.Most people would be hard-pressed to describe the difference between an accountant and a bookkeeper. The work involves entering the transactions in the daybooks, i.e. The work is clerical, which is often delegated to junior employees, in the accounts department. The task of bookkeeping is performed by a bookkeeper, who keeps track of all the financial data and organizes them systematically. This method of bookkeeping is common among business houses, due to convenience and user-friendly interface.

Purpose of bookkeeping and accounting software#

It is an emerging method of keeping a record of financial transactions wherein accounting/bookkeeping software packages are used by the businesses. Computerized Bookkeeping: With the introduction of computers, nowadays all the bookkeeping work is carried out through computers or laptops.It is mainly used by small businessman having minimum transactions, as it is cheaper and easier to maintain.

Purpose of bookkeeping and accounting manual#

Manual Bookkeeping: It is the conventional method of bookkeeping which involves manually writing the transactions in the books of accounts.There are two methods of bookkeeping, discussed as under: This system of bookkeeping is universally adopted and considered as accurate for recording business transactions. It means that each debit entry to an account has a corresponding credit entry in another account and vice versa. Double Entry System: This system is based on the duality concept, i.e.

This system of bookkeeping is considered as incomplete and inaccurate, as it only maintains a record of cash receipts and payments, purchases and sales. It is mainly used by small businessman, which have minimal transactions.

Single Entry System: As the name itself signifies, single entry system of bookkeeping involves the recording of only one side of the transaction, as it does not follow any principles or rules.

There are two types of bookkeeping system: The main aim of maintaining records is to depict the exact position of the company regarding the incomes and expenses. The purpose of bookkeeping is to make sure that the financial transaction is correct, chronological, up-to-date and complete.

To show the correct position: If bookkeeping work is adequately performed, it shows the correct position of the business, concerning the income and expenditure, assets and liabilities.

To ascertain financial effect: Bookkeeping tends to reflect the financial effect of all the business transaction occurred in a financial year on the business.

To record the transactions: Bookkeeping is all about keeping a full-fledged record of all the transactions, as and when they take place, in an orderly manner.