Bookkeeping - What is bookkeeping?

Definition: Bookkeeping involves organizing and managing all business transactions in a company.

Bookkeeping is the recording, on a day-today basis of the financial transactions and information pertaining to a business. It is concerned with ensuring that records of those individual financial transactions are accurate, up-to-date and comprehensive. Accuracy is therefore vital to the process.

Bookkeeping provides the information from which accounts are prepared but is a distinct process, preliminary to accounting.

Each transaction, whether it is a question of purchase or sale, or change of loans, has to be recorded in the books.

In principle transactions have to be recorded daily into the books or the accounting system

For each transaction, there must be a document that describes the business transaction, in the terms of a simple sales invoice, sales receipt, a supplier invoice, a supplier payment, bank payments and journals.

Double-entry bookkeeping

The double entry system of bookkeeping is based upon the fact that every transaction has two parts and that this will therefore affect two ledger accounts. Every transaction involves a debit entry in one account and a credit entry in another account. This serves as a kind of error-detection system: if, at any point, the sum of debits does not equal the corresponding sum of credits, then an error has occurred.

Bookkeeping in E-conomic

In the E-conomic Online Accounting system you can book your sales invoices, customer receipts, supplier payments etc. online and automatically reconcile transactions by import of your bank statements. Bookkeeping is further enhanced by the scanning add on module which enables you to link the scanned documents to your entries. See our guidelines or help videos on bookkeeping in E-conomic or find out more about the E-conomic Accounting system.