Bookkeeping
Bookkeeping is the activities concerned with the systematic recording of financial transaction made by a business firm on a day to day basis.
It allows a firm to keep an upto date record of the current incoming and outgoing amounts owed by customers and business firm.
For each transaction, there must be a document that describes the business transactions.
Importance of bookkeeping
For maintaining accurate record of financial transactions of a business firm.
For providing detail information about expenses and income to fulfill tax obligation.
For helping accountant to prepare financial statement to show a firm’s financial position.
For ensuring that cash flow is healthy and a firm is in strong position.
For assisting in formulation of necessary business strategy by proving necessary information.
For providing detail report of a firm’s status to investors in order to increase their confidence on their investment.
For helping decision makers to make appropriate financial decision.
For fulfilling necessary legal requirements to save a firm from legal trouble.
Advantages of Bookkeeping
Keeps detail record of financial transactions to supervise business account.
Meeting legal obligation in maintaining accurate and upto date financial report for the business form.
It allows creating accountability and transparency in financial records.
It allows making informed decisions about the business as it provides accurate data related to financial transactions.
It is helpful in preparing financial statement of the firms.
It retains existing investors and attracts potential investors by providing detail information about a firm’s performance.
It enables a business to see how cash is flowing in and out of its business firm.
It safeguards firm’s resources from internal theft and frauds.
Bookkeeping is essential to any business and small firms. It act as a financial informer to decision makers of such firm to take appropriate financial decisions in a suitable time for the accomplished a firm’s goals and objectives by keeping record of financial transaction made by a firm.
