Bookkeeping refers to the systematic process of accurately recording and organizing a business’s financial transactions on a daily basis, which provides the fundamental data for more advanced accounting and analysis tasks like financial reporting, auditing, and decision making.
Key Features of Bookkeeping
- Day-to-day tasks involve recording sales invoices, purchase receipts, bank statements, cash balances and other documents to itemized journals and ledgers
- Double-entry accounting ensures all changes in value are duly represented with corresponding debits and credits
- Collaboration with accountants guarantees compliance with GAAP and timely tax filings or audits
- Modern tools automate routine work to save time and minimize calculation errors
Example of Bookkeeping
Ahead of quarterly financials, the accountant for a small retailer reviewed bookkeeping records from the past three months to detect any reconciling items before finalizing revenue and expense accrual adjustments.
Key Takeaways
Proper bookkeeping establishes the foundational accounting figures upon which external stakeholders and internal decision-makers depend when evaluating a business’s historical performance and current financial health.