Bookkeeping Basics

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					Bookkeeping Basics

Most people probably think of bookkeeping and accounting as the same thing, but
bookkeeping is really one function of accounting, while accounting encompasses many
functions involved in managing the financial affairs of a business. Accountants prepare
reports based, in part, on the work of bookkeepers.

Bookkeepers perform all manner of record-keeping tasks. Some of them include the

-They prepare what are referred to as source documents for all the operations of a business
- the buying, selling, transferring, paying and collecting. The documents include papers such
as purchase orders, invoices, credit card slips, time cards, time sheets and expense reports.
Bookkeepers also determine and enter in the source documents what are called the financial
effects of the transactions and other business events. Those include paying the employees,
making sales, borrowing money or buying products or raw materials for production.

-Bookkeepers also make entries of the financial effects into journals and accounts. These are
two different things. A journal is the record of transactions in chronological order. An
accounts is a separate record, or page for each asset and each liability. One transaction can
affect several accounts.

-Bookkeepers prepare reports at the end of specific period of time, such as daily, weekly,
monthly, quarterly or annually. To do this, all the accounts need to be up to date. Inventory
records must be updated and the reports checked and double-checked to ensure that
they're as error-free as possible.

-The bookkeepers also compile complete listings of all accounts. This is called the adjusted
trial balance. While a small business may have a hundred or so accounts, very large
businesses can have more than 10,000 accounts.

-The final step is for the bookkeeper to close the books, which means bringing all the
bookkeeping for a fiscal year to a close and summarized.

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Description: Anyone who's worked in an office at some point or another has had to go to accounting. They're the people who pay and send out the bills that keep the business running. They do a lot more than that, though. Sometimes referred to as "bean counters" they also keep their eye on profits, costs and losses. Unless you're running your own business and acting as your own accountant, you'd have no way of knowing just how profitable - or not - your business is without some form of accounting.