BOOKKEEPING

 

Bookkeeping is the process of recording and organizing all financial transactions in a business. It's a fundamental aspect of financial management and involves tracking the money that comes in and goes out of a business.

 

The key activities in bookkeeping include:

 

 

• Recording Transactions: This involves keeping a detailed record of every financial transaction, including sales, purchases, payments, and receipts

 

• Creating Invoices: Generating bills for clients or customers for goods or services provided.

 

• Managing Accounts Receivable and Payable: Keeping track of what is owed to the business and what the business owes to others

 

• Reconciling Bank Statements: Matching the business’s financial records with bank statements to ensure accuracy

 

• Preparing Financial Statements: Compiling data into reports like income statements, balance sheets, and cash flow statements, which provide insights into the financial health of the business.

 

• Maintaining Ledgers: Keeping ledgers up-to-date, which are detailed records of all financial transactions categorized by type.

 

Bookkeeping is crucial for businesses as it provides a clear and accurate picture of financial performance and position. It's essential for compliance with legal and tax obligations, helps in making informed business decisions, and is critical for effective financial planning and analysis.