Also found in: Dictionary, Thesaurus, Legal, Financial, Acronyms, Wikipedia.


maintenance of systematic and convenient records of money transactions in order to show the condition of a business enterprise. The essential purpose of bookkeeping is to reveal the amounts and sources of the losses and profits for any given period. Proper bookkeeping should also reveal the nature and value of the assets and liabilities of a firm, as well as its net worth at the close of that period.

Bookkeeping records are kept in columnar form, using separate columns for the date of transaction, an explanation of the nature of the transaction, and its value. Other columns may be added. In general, two sets of columns are used, assets being placed in one set of columns and liabilities in the other set (a money value having been assigned to all assets and all liabilities of the business). Such an arrangement is called double entry. A balance sheet may be compiled at any time by totaling each column and subtracting the smaller total from the greater to give either a surplus or a deficit. The result is called the net worth, and it gives an indication of the financial state of a firm. A detailed balance for a period between two balance sheets is called a profit and loss statement.

The process of deciding whether to enter items into one set of columns or the other, i.e., into the debit side or the credit side, is called journalizing, since the analyzed items are placed in a journal, or daybook, soon after the transactions occur. Separate accounts of persons or sections are kept in a book called a ledger; the ledger is now often a computer file (created in "spreadsheet" software) rather than a physical book. The transfer of items from the journal to the ledger is called posting. In large businesses, the journal is broken into many sections, each concerning a separate function of the business, such as sales, purchases, accounts receivable, accounts payable, sales return, purchases return, and cash on hand. The journal also has sections for invoices, inventory, orders, cash, sales, bills, and checks.

Single-entry bookkeeping enters all debits and credits in a single set of columns in a journal and labels each entry Dr. (debit) or Cr. (credit). Thus in a single entry only one element of a transaction is entered. Single-entry bookkeeping fails to give detailed information as to the sources of gain or loss.

There are two main methods of accounting for money in a business. The cash method reports income in the year it is received and deducts expenses in the year they are paid. The accrual method reports income when it is earned and deducts expenses as they are incurred, regardless of whether the money has actually entered or left the business yet.

Any bookkeeping system must also account for all canceled checks, paid bills, duplicate deposit slips from banks, and other records of transactions. These records act as proof of the posted entries; they are usually organized chronologically or by type and are kept in filing cabinets. Bookkeeping machines, ranging from the simple adding machine to the computercomputer,
device capable of performing a series of arithmetic or logical operations. A computer is distinguished from a calculating machine, such as an electronic calculator, by being able to store a computer program (so that it can repeat its operations and make logical
..... Click the link for more information.
, help in maintaining properly organized books. Computers revolutionized bookkeeping and accounting systems, both for entering ledger items and for such operations as year-end profit-and-loss calculations.

The Babylonians, Egyptians, Greeks, and Romans kept business records. Double entry seems to have been first developed by the people of N Italy during the great commercial expansion of the 14th and 15th cents. and has consequently been called the Italian method. The system then spread to the Netherlands, England, and elsewhere. Single entry developed later.

See also accountingaccounting,
classification, analysis, and interpretation of the financial, or bookkeeping, records of an enterprise. The professional who supplies such services is known as an accountant. Auditing is an important branch of accounting.
..... Click the link for more information.
; auditingauditing,
examination and statement of accounts and of other documents connected with accounts by persons who have had no part in their preparation. Systems of financial inspection have long been used, especially in connection with public accounts.
..... Click the link for more information.

References in periodicals archive ?
Hannah Banfield, brand leader for Rosemary Bookkeeping.
It is account managing and bookkeeping company under Rayvat group which provides the best accounting & bookkeeping services in the market majorly in Melbourne, Australia.
Another element of the outsource Quickbooks Bookkeeping is the assortment of report producing wizards which it offers.
CHANGING CAREER: Natalie Stirland, who moved from from cookery tutor in adult education to become an accounts administrator at an architect's firm after studying bookkeeping at Stockton Riverside College
Gras [1947] described as the 'era of the petty capitalists', bookkeeping emerged in its single entry form.
Their tailored learning packages guide students through all the main aspects of bookkeeping, including final accounting for sole traders, partnerships, limited liability companies, clubs and societies.
Steven Beavis, a skills adviser at Gateshead-based Access Training, said: "For young people an apprenticeship in bookkeeping can open many doors - you could work for virtually any type of company in any sector.
Daud Mohammed, practice manager at Ariston Accountants, said: "We wanted an apprentice who could be trained to handle all our bookkeeping needs.
The company offers bookkeeping services to small businesses to "help alleviate a void that exists locally within the small business community," said Cindy Testa, owner of BookKeeping Express in Leominster, in a prepared release.
How to Open & Operate a Financially Successful Bookkeeping Business
Small business champion Cheryl Hopkins, who runs TaxAssist Accountants in Nuneaton, is calling for firms to be up-to-date with its bookkeeping records.
Wyandt Accounting Services and CCSI Bookkeeping Services recently moved to a new office at 4200 Meridian St.