Bookkeeping is the process of recording and organizing a company’s day-to-day financial transactions. Invoices, receipts, preparing customer invoices, processing payroll, revenue, taxes, earned interest, and other operational costs are examples of these.
It also includes the preparation of reports and the payment of invoices. The goal of bookkeeping is to accurately track daily transactions, which is required for accurate accounting.
Bookkeeping is classified into two types:
Single-entry bookkeeping is an accounting system that records one entry per transaction, such as cash taxable income, tax-deductible expenses, and so on.
The double-entry bookkeeping system uses two transactions per transaction to constantly balance the accounting equation: Assets = Liabilities + Equity. Every entry in this system has an exact opposite entry in another. And every transaction has an effect on two accounts: liability, asset, revenue, equity, or expenses.