Business Podcasting Blog

Bookkeeping is the charting of the money values of the operation of a business. Bookkeeping creates the information from which accounts are made but is a previous process, required prior to accounting.

Basically, bookkeeping grants two types of information: (1) the current value, or equity, of an entity and (2) changes in value—profit or loss—taking placement in the business over a single time period.

Management officials, investors, and credit grantors all need to have this kind of information: management in order to interpret the upshots of operations, to control costs, to budget for the future, and to make financial policy decisions; investors in order to analyse the upshot of business operations and make decisions for buying, holding, and selling securities; and credit grantors so as to assess the financial statements of an enterprise in finding whether to give a loan.

Bits and pieces of financial and numerical charts can be uncovered for almost every nation with a commercial history. Records of business contracts have been uncovered in the ruins of Babylon, and accounts for both farms and estates had been held in ancient Greece and Rome. The dual-entry manner of bookkeeping started with the development of the enterprising republics of Italy, and manuals for bookkeeping were developed during the 15th century in some Italian cities.

In the late 18th and early 19th centuries, the Industrial Revolution provided a significant stimulus to accounting and bookkeeping.

The rise of manufacturing, trading, shipping, and subsidiary services made correct financial recordkeeping a requirement. The past of bookkeeping, in fact, resembles the past of commerce, industry, and government and, in some part, assisted in forming it. The global spread of industrial and commercial activity required more cosmopolitan decision-making procedures, which in turn required higher sophistication in the selection, classification, and presentation of information, more so with the progression of computers. Taxation and government legislation became more significant and resulted in even greater requirement for information; business firms had to have information available to bolster their income tax, payroll tax, sales tax, and other tax reports. Governmental agencies and educational and other nonprofit institutions also became sizeable, and the demand for bookkeeping for their own inner departmental operations became higher.

Although bookkeeping processes can be very detailed, all are based on two kinds of books used in the bookkeeping procedure—journals and ledgers. A journal has the daily transactions (sales, purchases, and so forth), and the ledger has the records of individual accounts. The daily records kept in the journals are written in the ledgers.

Each month, as a general rule, an income statement and a balance sheet are constructed from the trial balance posted in the ledger. The job of the income statement or profit-and-loss statement is to present an analysis of the changes that have taken place in the ownership equity as a result of the transactions of the period. The balance sheet gives the financial condition of the business at the particular point in time with regard to assets, liabilities, and the ownership equity.

For information about MYOB bookkeeping brisbane or MYOB training brisbane, contact Stone Consulting. Stone Consulting also does bookkeeping in Redlands.