The Process of Bookkeeping And its Importance

Usually bookkeeping is studied by students opting to explore the world of accounting. A lot of times students face trouble with the topics that are covered in this subject. This acts as a hurdle to them completing their assignments. Bookkeeping assignment help is offered by various service providers. According to the experts that are available on various platforms, students should be able to understand the process of bookkeeping and its importance in an efficient way to move forward in their assignment journey.
Process of bookkeeping
The process of bookkeeping involves the below mentioned steps.
Identification of monetary transactions
It is the first step in the process of bookkeeping. In the accounting world, the transactions with whom some monetary value is attached are of much importance. Such transactions are recorded. Identification of quantitative data is of utmost importance. After proper identification and it being recorded, it is processed.

Recording of transactions
It is the second step in the process. Proper recording of the transaction is vital as it paves way for the other steps. Once different items have been identified with their monetary values, recording of them in a proper book or journal takes place. Every entry is posted and recorded in the journal. Other books where recordings are made in the primary stage (except the journal) include sales book and cash book.

Classification

It means grouping the transactions in accordance with their respective accounts.Classification is important as it is through classification that the book attains organization. The transactions that are a part of one account are classified under one head and care is taken that all the transactions that are related have been recorded. Great attention is paid here so that no transaction is left. It is only after this step that the transactions are casted.

Summarization

When the transactions are classified in accordance with their related accounts, addition or casting of the amounts take place. A trial balance is prepared that contains the records of casted amounts of each account. 

It is through trial balance that we are able to check if the accounts are being maintained in the correct way. This is noted keeping in mind that the total on the credit side of the trial balance equals the total on the debit side of the trial balance.

Why is Bookkeeping so important?

Bookkeeping not only turns out to be helpful for legal purposes but paves way for sustainability of a business as well. A check on cash flow is possible through accurate bookkeeping.

 It helps in planning investments in an efficient way as well. Informed decisions related to expenditure can be made if accounting records are maintained accurately.

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