Bookkeeping and business management
It is a habit or can be said a priority if the business in which the recording of the financial transaction and is an important process of transaction. This is like a diary that includes all kinds of expenditures of the business in purchase, sales, receipts and payments. This is done by the accountant of the company who maintains this record on daily basis. The person who maintains this is called an accountant, he who records the day to day expenditures ensuring the transactions. It is an important aspect in every business as it helps to estimate the further transactions and finance estimation of the business. It is to be done with an accuracy to attain the success and fix a vision for the business. It not only includes the participation of the accountant but also the participation of the owner as it is the matter of money and investments. It is a part of financial management.
It is important to have bookkeeping for every business organization as it helps to maintain a proper track record of the cash flow that is critically important for any business may it be small or may it be big. There are many businesses which go in a very successful manner but due to absence of this book keeping it comes to a down fall because of the unexpected cash flow.
According to the book keeping rules the payments should be done from the business bank account and that should be submitted ideally on a monthly or quarterly basis, which will ensure that the bookkeeping is done properly or the outgoings are monitored for the tax payments and accounting purposes. It helps identify the overspending and how to reduce them.
This helps to know if the business is going in profit or loss. This helps avoid the loss once it is estimated from the ledger. A proper book keeping is essential for any business to manage its daily function and keeps the business running successfully as for any business the main obligation is to maximize the profit and minimize the loss. And at the same time maintain its position as a responsible entity within the society. If a business does not have a proper book keeping it will be like going on a dark road without knowing the proper way.
Types of book keeping:-
This is also called as entry system there are two basic types of book keeping system’s, followed as such;
- Single- entry system :-
This is primary book keeping record is the cash book that is a kind of single entry system. It is similar to checking account register but allocates the income and expenses to various income and expense accounts. Here separate account records are maintained for big cash and the account payable and received with other relevant transactions like inventory and travel expenses. This is done with DIY book keeping software to speed up manual calculations.
- Double entry system :-
It is a set of rules for recording financial information in a financial accounting system where every transaction or event changes at least two different nominal ledger accounts.