Bookkeeping is simply the activity of keeping financial records of money that company owes and amounts owed to a company.
What is bookkeeping?
Bookkeeping is the way individuals, businesses and non-profit organisations record and keep their financial records in an easily understood way. A knowledge of simple balance sheets that record money coming in and going out is necessary.
Every company should keep accurate records of all the money it owes to its vendors, employees, contractors and all other partners. Equally, every company needs also to record all amounts that are owed to it by its business partners.
Whether you are running a home, are a club or charity treasurer or have a business, bookkeeping helps keep track of your business performance, cash flow, money, bank accounts and profits. Accurate books are also required by federal and local tax agencies.
Elements of business bookkeeping
- billing for goods or services provided
- recording receipts from customers
- recording payments to suppliers
- recording stock depreciation
- providing financial reports to auditors or accountants
What is simple bookkeeping?
For simple, low volume transactions you can use a single entry bookkeeping. This only requires an account book or simple spreadsheets. Whether you choose simple or more detailed double entry system of keeping your books, some essential information has to be recorded:
- The date
- A transaction description
- Whether it’s an income or expense
- The account balance after the transaction
Today much bookkeeping is carried out using intuitive computer software. MoneyPenny software tools simplify your bookkeeping, helping you keep track of your finances and saving you both time and money. With MoneyPenny you know instantly how much money is coming in and going out and can access an instant overview of your financial status as well as prepare reports for your accountant.