Bookkeeping is the backbone and foundation of an accounting system or accounting and business services. It creates and provides the information needed for analyzing management accounting.
Basically, bookkeeping or financial Accounting is the process that involves making a record of transactions such as sales, purchases, and expenses. These records are summarised so it may be presented in the form of financial statements which shows the health and growth of a company.
Bookkeeping answer the following key questions:
- How much does the company owe to the suppliers, tax authorities, banks, employees, and others?
- How much does each customer owe the company?
- How much capital is invested in the company by the owners?
- Is the business profitable?
As such, bookkeeping is essential in keeping track of your ongoing financial activities. This means that it is a vital activity in keeping track of the progress that your business is making. Plus, it can help you in decision-making.