Book keeping is an indispensable part of the financial process of running an organisation and most importantly, it helps to manage the bookkeeping expenses of an organisation. Book keeping is a record of all financial transactions, and plays an important role in the management of an organisation. It involves preparing comprehensive resource records for all financial activities, operations, and events of an organisation. It also involves correcting, updating, checking, and tallying all the financial records and results obtained from the financial Tax Filing records for reporting to the management.
The record of all the debit and credit transactions is maintained on the basis of bank reconciliation, tracking of cash transactions, purchases, sales, receipts, leaves in accumulated inventory, surplus cash, current assets, liabilities, and surplus cash position. All the transactions are recorded on the income statement side and recorded on the expense side as well. All the transactions in the business are accounted for on the basis of revenue recognition and all the expenses are accounted for on the expense side. In short, bookkeeping is the record of all the financial transactions that have taken place in the business or any of its component parts.
Bookkeeping with Accounts relating to Sales: The traditional approach to bookkeeping has been to keep the records of sales as the balances in the cash balances sections. This led to the recording of balance transactions as debits and credits. Nowadays, more emphasis is given on the accounts relating to sales. These records include the sales balance, net sales balance, gross profit and net loss and inventory balances. All these transactions are recorded under the sales account and are reported separately from the sales account.
Book Keeping With Accounts relating to Purchases: Generally the records in an organization relate to the total debits made against the credit card balance and all the corresponding credits added to the credit card balance. Debits and Credits are generally entered in the purchase order section of the inventory, product line or sales order ledger. Nowadays, most of the organizations adopt a hybrid model in which debits are recorded under the summary section and credits applied to the product line accounts, manufacturing accounts etc. This approach helps to keep the manufacturing accounts comprehensively organized while allowing debits to be converted into credits when required.
Book Keeping With Accounts relating to Finances: Under the general supervision of an accountant, financial transactions are processed through a process of mathematical algorithms that transform raw data into the financial statement. The entire procedure is called bookkeeping. There are many different types of accounting equations have different counterparts. For example there is a matrix accounting equation which transforms data into an accounting equation. Matrix accounting equations take a set of data, for example, bank cash flows, factory overheads, factory turnover etc., and then solve for a variable, the factor. Matrix equations can be used to translate between different currency pairs as well as to determine if there is any potential gain or loss.