Basic Bookkeeping
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Basic Bookkeeping involves keeping records of financial dealings that can be maintained by using computerized system or can also be done manually (this is not followed these days). Manual bookkeeping is achievable for small businesses or even for beginners but computerized system for bookkeeping will be advantageous for big and developed businesses. The process of bookkeeping begins with recording the financial transactions of business in primary-entry sales book, bank book, cash book, purchase book, journal and debit notebook/credit notebook. These books are considered as primary-entry books where business transactions are recorded first and then these entries are transferred to ledger accounts. The process of posting the transactions into ledger is known as ledger posting. There are two columns on bookkeeping ledgers Dr. (Debit) and Cr. (Credit). The debit column is present on the left side of bookkeeping ledger and credit is on the right side. The balancing of every ledger account is maintained at periodic time intervals that can not be more than 1 year. Many associations do this on month basis, quarterly or on the basis of six months. The trial balance is a statement where the sum of debit side should be equal to the sum of credit side which is made from the ledger balances. Trial balance is the investigation of the accuracy of arithmetic recording, transactions posting and total figures.
Tips for Basic Bookkeeping
The most ordinary errors that occur in basic bookkeeping can be easily fixed by following the below mentioned bookkeeping tips. - Employ Accurate Accounting System – Most organizations either employ accrual-based or cash-based accounting system. Under the cash-based method, people need to count all the incomes when they receive and expenses when they pay them. In case of accrual-based method, people need to count all the expenses and incomes when happen not when they actually pay or receive. In practical stipulations, this distinction in timing is applicable if the organization maintains inventory or stock on hand or maintains credit transactions. In these conditions, accrual-based accounting system can be the accurate choice for any business to succeed.
- Maintain Records on Regular Basis – It is one of the important and basic rules for accurate bookkeeping. If people do not maintain records daily, they will not be able to trail the financial condition of their company.
- Review and Handle Checks Carefully – This is also important to analyze the canceled checks prior to anyone else to avoid mistakes in bookkeeping system. People need to take similar care with bank checks as with cash to track any unauthorized payments.
- Obtain the Bank Statement at Month End – This is one of the most essential tips that can help one manage finances. Synchronizing the monthly records with the bank statement will make simple to reconcile the bank statement and follow the business expenses.
- Make Use of Computer – People can make use of computerized bookkeeping system to record the financial activities of the business as computerized system makes it easier to track the expenses and incomes, maintain tax documents and lots more.
In conclusion, these provisions and necessary adjustments make sure that bookkeeping will be done with GAAP (Generally Accepted Accounting Principles).
Basic Bookkeeping - TOP
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