What Is Bookkeeping?

Not as mysterious as everyone thinks, but the origin of bookkeeping is more or less lost at sea! 

Recent research appears to show that some method of keeping accounts has existed from as far back as 2600 B.C. - Babylonian records have been found written on small slabs of clay. 

According to Wikipedia, the term "waste book" was used in colonial America referring to bookkeeping. The purpose was to document daily transactions including receipts and expenditures. This was recorded in chronological order, and the purpose was for temporary use only. The daily transactions would then be recorded in a daybook or account ledger in order to balance the accounts. The name "waste book" comes from the fact that once the waste book's data were transferred to the actual journal, the waste book could be discarded.

Fast forward to 2018 and bookkeeping is essential to modern-day business success! The recording of financial transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation. There are several standard methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system

Single-Entry The primary bookkeeping record in single-entry bookkeeping is the cash book, which allocates the income and expenses to various income and expense accounts. Separate account records are maintained for petty cash, accounts payable and receivable, and other relevant transactions such as inventory and travel expenses. These days, single-entry bookkeeping can be done with bookkeeping software to speed up manual calculations.

Double-Entry This system  encompasses a set of rules for recording financial information in a financial accounting system in which every transaction or event changes at least two different nominal ledger accounts.

Photo by Shifaaz Shamoon, Unsplash

FB Logo White.png