Bookkeeping
Bookkeeping is the recording of financial transactions.
Transactions may include sales, purchases, income and expenses by a business/organization. A bookkeeper is the person who records the day-to-day financial transactions. They are usually responsible for inputting the day’s purchases, sales, receipts, and payments on to a computerised bookkeeping system. The bookkeeper is responsible for ensuring all transactions are recorded and brings the financial records to the trial balance stage where the accounting process commences.
Journals
A journal is a record of a financial transaction posted into a ledger as a debit and credit. For every debit there must an equivalent credit journal and so it follows there must be at least two entries for every journal/transaction recorded. This is the basis of double-entry bookkeeping.
Ledgers
A ledger is a record of accounts; these accounts are recorded separately showing their beginning/ending balance. The ledger records each financial transaction and also sums up the total of every account which is transferred into the balance sheet and income statement. There are three different kinds of ledgers that deal with book-keeping. Ledgers include:
- Sales ledger, which deals mostly with the Accounts Receivable account. This ledger consists of the financial transactions made by customers to the business.
- Purchase ledger is a ledger that goes hand and hand with the Accounts Payable account. This is the purchasing transaction a company does.
- General ledger representing assets, liabilities, equity, income, and expenses.
Trial Balance
A trial balance is a list of all the ledgers as at a certain date – usually the month/quarter/year end. It allows an accountant to gain valuable insight into the businesses financial activities for the period and is the base for the start of the accounts preparation process.
The bookkeeping team at Machon Accounting can assist you in setting up your ledgers. advising on specific journals, or we can assume responsibility for all your bookkeeping. Contact sarah@machonaccounting.com.
