What Is Accounting ?
What is accounting and bookkeeping ?
Accounting is the art of analyzing, recording, summarizing, reporting, reviewing, and interpreting financial information.
Bookkeeping is one of the components of accounting and is the process of recording, organizing, classifying, and maintaining a business’s financial records. It involves recording transactions and storing financial documentation to manage the overall financial health of an organization.
Here are some key points about bookkeeping:
- Recording Transactions: Bookkeepers meticulously record every financial transaction made by a business, from its inception to its closure. These transactions include sales, purchases, expenses, and other monetary activities.
- Supporting Documentation: Each transaction is documented based on supporting evidence, such as invoices, receipts, and bank statements. Accuracy and attention to detail are crucial.
- Frequency: Bookkeeping can be done as frequently as daily, weekly, or monthly. Regular updates ensure accurate financial reporting and informed decision-making.
- Tax Compliance: Accurate bookkeeping is vital for filing tax returns. Properly maintained records help businesses comply with tax regulations.
- Financial Insights: By organizing financial data, bookkeeping provides insights into a company’s financial position by providing finanancial statements. It helps business owners make informed decisions about budgeting, investments, and growth strategies.
Remember, good bookkeeping is essential for a healthy financial foundation and successful business operations.
Accounting & Bookkeeping Defined Video