Bookeeping/ Accounting

Overview

These both are the separate process the accounts are prepared from the information which is provided by bookkeeping. It is very important for the companies to have a basic knowledge of book-keeping and accounting. It is a unique process and it provide all the information by which accounts are prepared. By making proper accounts and books the companies will be able to track all its information on its books to build operating, investing and financing decisions.

Types of Books

1. Sales books
2. Cash books
3. Records together with all documents
4. Purchase books

Benefits

1. Provide good decision making:- A correct and proper bookkeeping helps in good decision making as it provides an accurate measure of the performance and it also provides a lot of information to make great decisions. It is a dependable source for companies to measure financial position.
2. Legally Required:- The keeping of books of accounts and financial statements is a legal procedure in the case of banks, insurance companies and some other companies. That's why bookkeeping has become necessary for such companies.
3. Provide necessary information:- It sums up all the expenses, incomes and all the other legal records and provides records of all the financial transactions so it becomes the base of accounting and if bookkeeping of a company is not accurate then the accounting of the company will never be accurate. By providing all the information it states how much profit we have made at a point of time.

Types of Bookkeeping system

There are two types of bookkeeping system:

1. Single entry system
2. Double entry system
3. Single entry system:  It refers to a system where the transaction of the business affect only one account and in single entry system cashbook is prepared to show the receipts and payment of transactions.
4. Double entry system: It refers to a system where the transaction of the business is recorded in two accounts.