All the financial transactions in a business have to be recorded, and when this is done, it is called bookkeeping. As renowned bookkeepers Darcy Services say “It is a bookkeeping services Perth’s job to organize, classify and maintain all the financial transactions that take place in a business”. Simple transactions can be recorded by the single-entry accounting system, but if it is more complex, then bookkeeping would have to be done in the double-entry accounting process. All the bookkeeping transactions are made in a way that there is always some supporting documentation with the bookkeeping system. This document might be a purchase order, a receipt, invoice, etc.
There are two main ways that you can use to record bookkeeping.
These are recording the whole thing by hand in the form of a journal, or you can also use a spreadsheet on the computer like Microsoft excel. Many businesses have special computer programs just made for bookkeeping.
All bookkeepers can use either single-entry or double-entry bookkeeping systems to show all their financial transactions. Any good bookkeeper has to be aware of how to use credit and debit in the balance of the books and also understand the way that the firm’s chart of accounts works.
What is needed to set up bookkeeping for any business?
Whenever you set up any bookkeeping system, it Is important that you set up a very good accounting system, and you should know if it is a cash or accrual accounting system. If your business is very small and if it is just a one-person business then it would be good if you stick to the cash accounting. When you start to use cash accounting, then you can record till all the cash starts to change hands. You could use accrual accounting and record any purchase and sale as soon as it happened even if the cash gets exchanged at a later time. Some firms will start off by using cash accounting and later on the switch to accrual accounting when the business starts to grow. You will need to use the accrual accounting system if you plan on offering your customer any credit.
Conclusion
Accounting is very important for all businesses, and once companies get bigger, then they need more care. You can use a single entry system, but as the business gets bigger and the accounts get more complex, it can become important to have a double-entry bookkeeping system. It is important that people understand equity, assets, expenses, revenues, and liabilities as it can help to balance the books. In bookkeeping you would have to balance the books at the end of the year. Cash accounting is done more often from time to time whenever the money changes hands, and even if the cash does not change hands, it is still recorded.
