bookkeeping

Bookkeeping is the systematic recording of financial transactions for a business or organization. It provides the foundational data that underpins accounting and financial reporting. While accounting involves analysis and interpretation of financial information, bookkeeping focuses on accurate record-keeping and data integrity.

Core bookkeeping activities include recording transactions in journals, posting entries to ledgers, maintaining a trial balance, and tracking accounts payable, accounts receivable, payroll, inventory, cash, and fixed assets. Most systems use the double-entry method, where every transaction affects at least two accounts with equal debits and credits. Source documents such as invoices, receipts, and purchase orders support entries and help ensure traceability.

Bookkeeping can be manual or computerized. Modern practices rely on accounting software and cloud-based platforms with a chart of accounts that groups transactions into categories. Regular tasks include bank reconciliations, expense coding, and periodic closings to prepare trial balances and basic reports. Internal controls, including separation of duties and proper documentation, help protect against errors and fraud.

The main outputs of bookkeeping are financial statements and management reports. These include the income statement, balance sheet, and cash flow statement, as well as reconciling schedules and budget-to-actual reports. Bookkeeping data supports tax preparation, regulatory filing, and audits by providing a clear audit trail.

Bookkeeping roles are typically performed by bookkeepers or accounting clerks, who may work in-house or for external firms. The field sits within the broader accounting profession, with accountants and auditors performing higher-level analysis, strategy, and assurance based on the recorded data.