Bookkeeping is a part of accounting process that follows some basic steps for recording the transactions.

1. A quick guide on accounting
process of bookkeeping

2. Table of contents
 Introduction
 Difference between accounting and bookkeeping
 Process of bookkeeping
 Entry system in bookkeeping
 Types of bookkeeping
 Differences between present day bookkeeping with old method
 Importance of bookkeeping

3. Introduction
 Bookkeeping is the process of recording, analyzing, storing and retrieving of financial
transaction that takes place in any profit or non- profit organization.
 Systematic way for the record of transaction.
 Requires daily update.
 Requires knowledge of financial transaction including debit and credit.
 It is done on day to day basis.

4. Difference between
accounting and bookkeeping
ACCOUNTING
 It is a complete system, representing
whole process of accounting
system.
 Involves number of process;
recording, analyzing, classifying,
interpreting, summarizing and
reporting.
 Requires technical knowledge.
BOOKKEPPING
 It is only the part of accounting
process.
 Involves only one process; keeping
the record.
 Requires the basic idea on financial
transaction.

5. Process of bookkeeping
• Filing of source documents
• Sorting of business related transactions from all the
source documents.
• Entry of transaction into journal.
• Transfer of transaction from journal to ledger.
• Preparation of final account at the end of the year.

6. Entry in bookkeeping
 Whenever there is any transaction made in the business, whether its inbound or
outbound; there is always a proof provided to the related person of the firm either
the invoice, written slip or any other form. Hence, these are source documents
which must be properly filed.
 All the source documents are not necessarily important, only some are of interest
for the business record, Hence proper sorting of important documents must be
done.
 Journal entry of source documents followed by the ledger entry is then initiated
with reference to source document,
 Financial statement is prepared either, monthly, quarterly or annually with the help
of journal and ledger entries.

7. Entry system in
bookkeeping
• Single entry system
• Double entry system

8. Single entry system
 It is an informal or easy bookkeeping system.
 Only one entry is done either in the form of revenue or expenses.
 Doesn't provide accurate knowledge on financial affairs of the
business.
 Useful for small business having few financial transaction that comes
in play.
 Proper idea on profit and loss cannot be obtained.
 Doesn’t require very good accounting knowledge.
 No requirement of advanced software.
 Incomplete system of recording transaction.

9. Double entry system
 It is quite a complex yet a standard method of bookkeeping.
 Two entries are done in the form of debit and credit.
 Personal, real and nominal account are maintained.
 It helps to determine profit and loss accurately.
 Required by well- developed firm or organization.
 Provide accurate knowledge of financial affairs of any firm.
 Requires well developed tools or software to simplify the work.
 It is Complete method of bookkeeping.

10. Types of Bookkeeping
 Day book: It is used for day to day record of financial transaction. Such as : sales
day book, purchase daybook, etc.
 Petty cash book: It is used to keep the record of small amount involved in
purchase of some necessary items.
 Journals: It is the systematic record of every transaction either in one single book
or in separate book as a reference in later accounting processes.
 Ledger: It is systematic record of financial transaction under classified accounts.
Example: purchase ledger, sales ledger etc.

11. Present day
book- keeping and old method
Present day
 Entries done using electronic
medium such as computers and
laptops.
 Follows double entry of
bookkeeping.
 Use of software with all the coded
information's.
 Requires very less time.
 High level of accuracy.
 Safety of record for years.
Old method
 Done manually using hands.
 Follows single entry of bookkeeping.
 No software was used.
 Time consuming.
 Chances of mistake in the entries.
 Higher chances misplace.

12. Importance of bookkeeping
 Provides idea on profit earned by the business.
 Keeps all the record safely.
 Helps to evaluate the growth of the business.
 Helps to invest money qualitatively.
 Keeps the account of financial condition of the company.
 Helps to take any important decision for the firm.

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