Bookkeeping involves the daily recording of a company’s financial transactions into organized accounts, utilizing accounting principles and supporting documentation. It is a crucial aspect of accounting for several reasons.
Effective bookkeeping enables businesses to stay current with their financial transactions and generate accurate financial reports, which aid in measuring business performance. Well-managed bookkeeping allows for close monitoring of a company’s financial capabilities and is also beneficial for tax purposes.
There are two distinct types of bookkeeping: single-entry and double-entry bookkeeping. Additionally, two bookkeeping methods exist: cash accounting and accrual accounting.
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