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How Bookkeeping is done - It's Easier than You Might Think!

Bookkeeping

By johny sinsPublished 3 years ago 3 min read
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Bookkeeping

How bookkeeping is done by accountants? In general, accountants are concerned with the recording of financial transactions and record all that they are doing. That includes the income they make from a job, the value of their assets, liabilities, profits or losses, and any other relevant items. The balance sheet, which is a summary of all these items, is what the accountant records for the month.

Types of Bookkeeping System

The accounting system used in most businesses is called the double-entry bookkeeping system. This is not the same as the single-entry bookkeeping system. The double-entry bookkeeping system records twice as many entries, as it shows two sides to every transaction: the cash balance (the difference between assets and liabilities), and the equity (the difference between equity holders and stock owners). The bookkeeper then adds these two values together, and this gives a snapshot of the business's financial condition.

How Bookkeeping is Done by Accounting Firms?

How bookkeeping is done by accounting firms is based on these principles. Firstly, if the business has a single proprietor, the person who does the accounting is called the accountant. Secondly, the accountant creates the master record, which is a record of all the transactions for the business. An accountant then makes entries into this master record, using specific software programs.

How bookkeeping is done by accounting firms is also related to the balance between cash and equity. If there is more equity than money in a business, there will be more cash flow coming in than is leaving the business. This is called the liquidity effect of accounting. This effect is most seen in publicly traded businesses.

Bookkeeping for Accurate Records

Bookkeeping Record

For a company to be able to do their bookkeeping there must be accurate records of all the financial transactions they make. These transactions include sales, purchases, income, and accounts receivable. The records must be well organized so that the accountant can get an accurate picture of the balance between all of these things. Many times an accountant will create a report that is used as part of the financial statements of a company.

Guidelines for Accounting Department

A number of books have been published that provide guidelines for how to set up an accounting department and how to do your own bookkeeping. One of the best books that you can use as a guide when doing your own bookkeeping is "How To Do Your Own Bookkeeping". Another great book that provides excellent information is "Guerilla Marketing". Both of these books are written by the well-known Bill Gross. The information that you gain from these books can help you build your own bookkeeping department.

Build your Own Bookkeeping Department

In order to effectively build your own bookkeeping department, you should start by contracting with an accounting firm. This will allow you to build up your own bookkeeping department without the overhead that most full time accounting firms like TTA, take. You can also use your accounting firm as a learning tool, which will allow you to build up your own skills in terms of your cash flow, accounts payable, accounts receivable, and much more. Keep in mind that having your own bookkeeping system also helps to improve your cash flow throughout the business. All of this means more money that you can put in the bank!

Bookkeeping is to make use of a Double Entry

The final step in how to do your own bookkeeping is to make use of a double entry accounting system. A double entry bookkeeping system is much more effective at maintaining accurate financial records. For example, if you only have a manual entry for the debits, then you will have to make sure that you write the debits on the debit side of your books, and the credits on the credit side of your books. This is not only more time consuming than what you might think, but it can cause confusion down the road when you have to make a credit or debit transaction.

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johny sins

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