What is Bookkeeping?

What is bookkeeping? It is the process where all financial transactions of a business or other entity are recorded into a set of journals and ledgers. Putting this information into a set of books makes it easier to review and analyze. It can be compared to the way an author compiles information into a book making it easier to understand. It provides the necessary information for bankers to give business loans or accountants to prepare tax returns. Business owners also use this information to see how well their companies are doing and make financial decisions.

Bookkeeping records the various costs, income and expenses of a business or nonprofit organization. The actual work is a repetitive process of data entry, taking information and putting it where it belongs. You need to know for what purpose money was spent or how it was earned in order to classify it correctly.

Bookkeeping is also a career opportunity. It involves organization and detail, working with paperwork and numbers. It also entails understanding how a business or other entity operates financially. Working as a bookkeeper can be very rewarding and can open doors in the business world.

If you are going to become a professional bookkeeper, you need to understand accounting principles like debits and credits, journals and ledgers, generally accepted accounting principles, balance sheet accounts, financial statements and the chart of accounts. It will take some dedicated work on your part to learn these.

So, what is bookkeeping? It is a very important part of our lives whether we know it or not. Because so much of what we do involves money, accounting is something that is always at work behind the scenes. It is important even in our personal lives and is a rewarding career choice for those who do it professionally.

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