What is Bookkeeping?
Bookkeeping is defined as recording day to day financial transactions of the business in a structured format so that it can be retrieved and can be accurately analyzed. In this section on bookkeeping, we discuss the double entry in the accounting system (Debit and Credits) and its key differences. We also discuss what are journals and ledgers in accounting.
Other topics discussed in this bookkeeping in accounting sections
- What is a Trial balance and steps to prepare a trial balance?
- What is Reconciliation of Books?
- What is petty cash in accounting (with templates)?
- Debit note vs Credit Note
Debit vs Credit in Bookkeeping Basics
Debit is the use of value for a transaction, whereas Credit is the source of value for a transaction.
Double Entry Accounting System in Bookkeeping Basics
Double entry accounting system refers that any entry made to the system will have an effect in at least 2 accounts.
Journal in Bookkeeping Accounting Basics
Journal in accounting is named as the book of original entry.
Ledger in Bookkeeping Accounting Basics
Ledger in accounting book is called the second book of entry.
Journal vs Ledger
Journal is the first entry of financial transaction, whereas Ledger is recorded from the journal in a “T” format and the source of trial balance, income statement, and balance sheet.
What is Trial Balance ?
Trial balance provides a bridge relationship to the ledger accounts and the final statement.
Reconciliation of Books
Reconciliation Books of Accounts are the blueprints of any business.
Petty cash is a small amount of cash needs to be kept in office for utilization of daily small expenditures.
Debit note is sent by the purchaser of goods to the seller of the goods.
Credit note is also an official, etched out, written format of stating sales return.