These Little Known Facts About a Modern Bookkeepers Routine

1. These Little Known Facts About a Modern Bookkeepers Routine What is Bookkeeping? In simple terms, recording the financial transactions of any company or firm is known as bookkeeping. Transactions such as sales, purchases, receipts, and payments. It helps you understand the financial position of your company in terms of assets, liabilities, sales, and expenses. History of Bookkeeping In the old days, bookkeeping for small firms and businesses began by writing entries into journals. Journals were known as the books of original entries. Over time, special books and journals were introduced which consisted of sales journal, purchases journal, cash receipts and payments journal. After the entries were completed according to date, the entries were posted to the general ledger. Each account balance was then calculated and the final figures were used in the financial statements of the company. Modern- Day Bookkeeping Computers andbookkeeping software have taken over the recurring tasks of accounting. For example, the preparation of an invoice will automatically update in their respective customer's ledger account. Thebookkeeping softwarehas been written in such a way that every transaction should have equal the debit and credit amounts. Also, these computers

2. eliminate the error which could occur while manually writing these entries. The ledgers balance themselves using the software coding and the balances can be directly used in the preparation of financial statements. Before we get to what does a modern bookkeeper do, we need to understand thedifference between bookkeeping and accounting Difference Between Bookkeeping and Accounting Many people confuse accounting with bookkeeping. So, let’s learn the difference between the two: 1.The definition of bookkeeping as we discussed above, is to manage the books of the organization, whereas accounting refers to evaluating the financial position of the company. 2.Bookkeepers record and maintain the financial records of a company by entering the day-to-day transactions, while accountants use that financial information to create advanced financial reports to help the business owners to make strategic decisions. 3.On one hand, bookkeepers provide the layout of the financial health of a business for a specific period of time, let's say a week or a month. On the other hand, an accountant helps reveal the financial position of the business and make projections about the future of the company. 4.Both these functions are complementary to each other. If the bookkeeper doesn't maintain the records correctly, the work of an accountant can never be accurate which will result in losses for the company. Now, that's clear. Let's talk about what does a bookkeeper do all day? On a daily basis, the bookkeeper’s routine includes documenting and updating the financial transactions, reconciling accounts, making payments, depositing checks, generating a variety of financial reports, recording expenses and then planning for those expenses. Let's dig a little deeper. Daily Routine of a Bookkeeper 1.A Bookkeeper Manages Account Payable and Receivables They have to generate invoices, prepare the cheques and make payments by monitoring the digital payments and making payments to suppliers and creditors. They also have to manage the collections by recording the bad debts and make sure the payments are received on time. 2.A Bookkeeper Manages the Expenses and Overall Budget

3. Bookkeepers plan the expenditure by setting aside money for expenses like office rent, electricity, raw material purchases, taxes, etc. Also, they have to make sure to process the salaries of the employees on time. They also calculate and prepare tax payments in an orderly fashion to avoid penalties or penalization. 3.A Bookkeeper Collates and Categorizes Data This one is a huge part of any bookkeeper's day. They are solely responsible for maintaining and recording all the financial transactions and collecting data from the bookkeeping software. It does not end there, they also have to collate the accounts payable and receivables data and categorize them accordingly. 4.A Bookkeeper Reconciles Data for Financial Reporting In order to generate the financial statements like balance sheets, profit and loss account, and the cash flow statements, the bookkeepers reconcile all the bank accounts from bookkeeping and accountingdifference. Let’s Summarize, Shall We The job of a bookkeeper is not limited to keeping the record of transactions, it is much more than that. Never confuse the work of an accountant to a bookkeeper, even though their work may seem similar and often confusing.