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Accounting & Bookkeeping

Lectures & Insights > Bean Counter Mini Lectures
Accounting and Bookkeeping

Why would you want to learn bookkeeping and keep up to date financial records anyway ? Can't you  hire an accountant to come after the end of the year and get your check book and shoe box and do your taxes ? Sure you can ! And yes you will have adequately fulfilled your taxpayer obligations. But in order to run a business and know what, where, and when to take corrective actions requires business information. How do you get and where do you find this information ? You don't if you don't keep accurate and current records about your business financial activities (bookkeeping).

Let's begin with a definition for accounting. Accounting is the art  of analyzing, recording, summarizing, reporting, reviewing, and interpreting financial information. Let's also define what bookkeeping is and is not. I hate to tell this but I'm going to tell a true story about Dave in high school. He thought he was fairly smart back in his high school days and took all the college prep classes. His high school offered bookkeeping classes but he had no clue as to what that course was about. He thought bookkeeping was a course on how to properly organize and stack the reading books in the proper place and shelves in the library using that Dewey decimal code. That is keeping the books isn't it ? Well kind of, but that's not the bookkeeping you're going to learn here.

Bookkeeping is one of the components of accounting. Think of accounting as the mom and bookkeeping as one of her children. Bookkeeping is the process of recording and classifying business financial transactions (activities). In simple language-maintaining the records of a businesses or an individual's financial activities. Bookkeeping's objective is simply to record and summarize financial transactions into a usable form that provides financial information about a business. Accountants normally plan and set up the accounting and bookkeeping system for a business and turn over the day to day record keeping to the owner or one of his or her employees. In this age of computers more and more of the daily bookkeeping is being done using bookkeeping software and computers although some businesses still maintain manual records. Due to the reasonable cost of computers and software, I recommend an automated (computer) bookkeeping system.

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