This article is for beginners, who want to learn basics of bookkeeping. Everyone can get basic idea from this and will be able to implement these concepts in real world scenario. If you want to start your career as a bookkeeper or accountant than this article is for you.
What is Bookkeeping?
Bookkeeping refers to the recording of the daily financial transactions of a business. It also involves updating the financial records and filing them manually and electronically for accounting purposes.
Keeping the financial record is the duty of a bookkeeper, who accounts the day-to-day financial transactions of a company. They regularly write the daybooks (which contain records of sales, purchases, receipts, and payments), and article each business transaction, whether cash or credit, into the accurate daybook—that is, petty cash book, suppliers ledger, customer ledger, etc.—and the general ledger. After that, an accountant can create financial gossip from the data recorded
Bookkeeping is required to run your business
If you’re a little business owner, you’ll be recognizable with juggling several everyday jobs at a time. As well as keep things running, you need to produce profits, keep your customers contented and look after financial data. Keep tracking the financials can be a chore though, and one of the essential choirs you may have is who you get to help with your accounts. Do you need an accountant, a bookkeeper or both? Let’s expose things.
Accountants and Bookkeepers have different jobs and farm duties. An accountant’s leading centre of attention is:
- The training and lodgment of constitutional returns
- Advising on legal entity structures
- Giving universal business and financial advice.
Accountants are typically members of a constitutional association. Qualified accountants might call themselves CPAs (Certified Public Accountants), CAs (Chartered Accountants) or other titles, depending on the country they're working in.
Bookkeepers can supervise lots of different duties within a small organization. The main focus is the organization, recording and reporting of financial transactions as part of the operational life of a small business. In more local times, some bookkeepers have extended their range of duties to include:
- Training clients to use accounting software
- Completion of file management and inventory control processes to create efficiencies within the business
- Implementation of POS (point of sale) systems that capture the daily transactions in a retail environment.
- Develop, implement, maintain and review internal business processes.
You will often find that a bookkeeper has an area of specialization and it’s a great idea to ask them more about this when you are looking at hiring them for services.
What does a bookkeeper do?
The job description of a bookkeeper varies depending on the size of the business or organisation that he or she works for. In a small organisation, a bookkeeper’s role is pervasive and may include duties that otherwise assigned to different people or departments in a big organisation.
In a large organisation, a bookkeeper’s position is often more narrowly focused, and might involve only certain aspects of the general bookkeeping function.
A bookkeeper’s duties include:
- Maintaining physical and electronic files.
- Recording all financial transactions.
- Billing clients.
- Payroll administration.
- Paying vendors.
- Recording financial transactions.
- Generating cheques and signing off on them.
- Preparing tax returns and other financial documents.
- Making bank deposits.
- Performing various administrative duties.
- Ensuring, that all records posted to the right ledger accounts at the end of each day.
Benefits of studying bookkeeping:
- There are vast career opportunities; you can explore further and go on to become an accountant or auditor.
- There are many job opportunities because every company or business needs a bookkeeper.
- You can work as an independent contractor and perform bookkeeping services for a variety of clients.
- If you are a small entrepreneur, you can save money by learning how to do your bookkeeping.
What this course cover?
Debits and credits:
Assets and liabilities:
Double entry bookkeeping based on the concept of Debits and Credits. Our bookkeeping for beginner’s course shows how every transaction has both a credit and a debt impact. The accounting equation states that Capital equals Assets fewer Liabilities and a core bookkeeping principle is that an increase in Expenses, Assets or Capital recorded as a Debit, while an increase in Liabilities, Income or Drawings is recorded as a Credit. Our bookkeeping for beginners courses explains how different types of transaction (purchases, sales, payment of invoices, taking a loan etc.) are classified and recorded in double-entry bookkeeping, and how these entered in the commonly used accounting software packages (Sage, QuickBooks, IRIS, TAS & VT).
Another vital Accounting concept covered by our bookkeeping for beginners training is that of assets and liabilities. Assets are what belongs to the company and are of value to the business. Liabilities are what the company owes to other organisations and individuals. The Balance Sheet groups these into long term and short term or current assets and liabilities. Current Assets include money in the bank account, Sales invoices due to be paid soon (trade receivables) and stock in hand (inventory), while Current Liabilities comprises bills due to be settled soon. The financial value of these indicates the liquidity of the company. Long-term assets are also known as Fixed assets and are buildings, machinery in a factory, vehicles and office equipment and furniture, while long-term liabilities include loans and mortgages, which need to be paid back later.
At the end of the financial year, each business prepares a series of year-end reports. These statements record and analyse financial activities for the year enabling the managers to make business decisions. The profit and loss statement summarizes the income and expenditure of the company, showing the profit or loss for a specified financial period. The end of year balance sheet summarises the assets and liabilities of the company, showing the financial health of the organisation. Our bookkeeping for beginners courses explains how to produce these and other regularly used reports and how the individual transactions feed into them.