BOOKKEEPING

What is Bookkeeping?
• Bookkeeping is the process of tracking and recording a
business’s financial transactions.

• These business activities are recorded based on the

company’s accounting principles and supporting
documentation.
Examples of these documents include:

•Bills
•Receipts
•Invoices
•Purchase orders
Why Is Bookkeeping Important?

When an effective bookkeeping system is in place,

businesses have the knowledge and information that
allows them to make the best financial decisions.

Tasks, such as establishing a budget, planning for the

next fiscal year and preparing for tax time, are easier when
financial records are accurate.
What is an account?

• In accounting, an account is a record in the general

ledger that is used to sort and store transactions.
• Most accounting systems require that every
transaction will affect two or more accounts.
• For example, a cash sale will increase the Cash
account and will increase the Sales account.
• The term account is also used in transactions where
suppliers sell goods to customers and grant credit terms
such as net 10 days.
• In those situations, a supplier is selling goods on
account and the customer has purchased goods on
account.
• The supplier has also increased the balance in its current
asset account entitled Accounts Receivable and the
customer will increase the balance in its current liability
account entitled Accounts Payable.
• CAPITAL
• Is used to record the original and additional investments of the
owner of the business entity.

• WITHDRAWALs or drawings
• Is when the owner of the business removes cash or other assets
from the business
• COMMON STOCK
• is a security that represents ownership in a corporation. Holders of
common stock elect the board of directors and vote on corporate
policies.

• RETAINED EARNINGS
• are the amount of profit a company has left over after paying all its
direct costs, indirect costs, income taxes and its dividends to
shareholders.
• are the profits a company keeps for future use.
 Determine whether the account is an
ASSET, a LIABILITY or EQUITY
Cash and cash equivalents
Accounts receivable
Trademarks
Patents
Notes receivable
capital
 Bank accounts
Furniture and fixtures
Common Stocks
Equipment

DEBTORS
Service Vehicle
 Accounts payable
Accrued compensation & benefits
CREDITORS

Retained earnings
inventories
Net profit
 Deferred revenues
Buildings
Principal and interest on a bank loan
Salaries and wages payable
Land
Notes payable .
WITHDRAWALS or drawings
Marketable securities