Professional Documents
Culture Documents
Unit 3 - Bookkeping-1-2
Unit 3 - Bookkeping-1-2
A lot of people look down on bookkeepers, and the act of bookkeeping is often
seen as one of the less challenging aspects of accountancy. However, without
good bookkeepers, accounts would find that they were faced with a huge amount
of extra work. Bookkeeping is the foundation of accounting and is just as, if not
even more important than some of the more 'glamorous' accounting work.
A lot of people think that bookkeeping and accounting is the same thing, but this is
wrong. The confusion comes from the fact that bookkeeping is an element of the
accounting process. Accountants create reports from the financial transactions,
which were recorded, and file the appropriate forms with the government. But it is
the bookkeeper who provides the accountant with the source information which
these reports are based on. So without the bookkeeper the accountant would be
forced to spend a great amount of time recording every transaction.
In the single entry system, each transaction is recorded only once. This means that
the record does not accurately show the effect of the transaction and as such is
less effective. Single entry bookkeeping is often used by sole-traders starting out in
business as it requires little expert knowledge. In fact most people who have
balanced their chequebook have used a single entry system.
Bookkeepers bring 'the books' to the trial balance stage at which point the work is
passed to the accountant to prepare the income statement and balance sheet
using the work prepared by the bookkeeper.
Bookkeepers usually also deal with petty cash and authorise its use,
VAT returns and personal tax returns. In fact, just about any 'accounting' function
that doesn't require an official statement from a certified accountant.
In effect anyone working on accounts preparation before this stage can be labelled
as a bookkeeper although most people prefer a more formal title such as accounts
payable. Self-employed bookkeepers face the added difficulty of having to deal
with clients who have either incomplete or disorganised financial records and as a
result have to spend hours wading through boxes of receipts before they can start
recording the financial information contained in these receipts.
Unfortunately a lot of people remain unaware of the complexity of the role of the
bookkeeper, and the term is now more commonly used to show an individual
preparing basic financial records rather than a member of a professional
accounting team.