What is Bookkeeping and How we  do it.

Bookkeeping is the first stage of Accountancy. It’s recording of the monetary transaction as per standard operating system. It starts from the voucher to balance sheet. Here you should note the important point that bookkeeping is part of accounting. Accounting is a broad term which starts from bookkeeping to data analysis.

Definition: Keeping and updating each and every transaction (even have a value in pennies or sent) into the all relevant books. The record should be updated as transaction occurred. Transactions are meant here by any type of give or take in terms of monetary irrespective of on cash or credit. It mostly involved the clerical work.

Monetary Event means which have a connection with value/money that can be measured in term of money or have the financial position. Non-monetary events are those which does not have any cost or value. Like giving free of cost advice, counseling, gifts. But when we give the cost of to it, it will be converted into the monetary event and we should record into books.

Point to be noted that bookkeeping will be of the entity, not of the owner. Even if the owner gives or takes anything we consider him separately we should record in it. Like his investment will be converted into capital and if he takes it anything free it will be recording in term of drawings. Means entity loses some assets and in return, we charged to another account.



Here you must keep in mind, that it is not just data entry. Before going to update any transaction Bookkeeper should know the basics of accounting for recording every entry as per its classification.

Father of Bookkeeping: History of Bookkeeping is too old and gets evolution with the passage of time and needs. Fra Luca Bartolomeo de Pacioli is known as the father of accounting and bookkeeping. He was born in between 1446-1448 in Italy. Basically, he was Italian mathematician.


Cycle or process of Bookkeeping starts from updating the day book on daily basis properly on the basis of vouchers, updating the relevant account of every transition like ledgers, T-Accounts. Daybook is the main seed of business accounts tree. Every ledger, accounts, banks details, profit and loss account, balance sheet, cash flow statement or analysis are connected with it.

Role of Bookkeepers ends with the recording of every entry as per SOP.


Type of bookkeeping

Every transaction has an effect on at least two accounts. If one thing is debt then there should be something credit.  There are two types of bookkeeping as mentioned below

How to do bookkeeping?.  For the small business entity, there is no need for a certificate of accountancy or degree of accounts. You can do it manually or through software with a little knowledge of classification of every transaction. It can be done by purchasing manual books from markets, these are called day book, Ledgers. Manual recording is beneficial for keeping safe from virus type issues. It also helps from avoiding the manipulation or editing records of books. On the other hand, its time consuming and cost effective too. You need to update the following books up to date.

  1. Daybook ( A book updated on daily basis with every transaction)
  2. Cash and cash At bank book (Cash and Bank Account detail)
  3. Account Receivable Register (Parties ledgers from which payment need to be collected)
  4. Accounts payable register (Loan records, showing liability of entity)
  5. Inventory Register (Raw Material and Finished Goods)
  6. Sale and Purchase register (Know to whom we sell and buy the material and product)
  7. Payroll Register Keeping the record of employees and labour.
  8. Tax Records
  9. Profit and Loss Account
  10. Balance sheet


In this digital era, you may get services of software houses to make software as per your demand and need. This will help you for getting more results with per click. It also increases the effectiveness of business entity. At every stage, you can get the result of business. Just with posting one entry you will get the updated record of everything, like account receivable/ payable, Inventory level, How much sale and purchase in the specific date, Employees profile and due payment to them. There are a lot of advantages of software-based bookkeeping. But keep in mind system is a machine; it can be the effect of any mishap or privacy effect issue. So the best thing is to keep the strong system. Vouchers and day book should also maintain a system.

It depends on the scenario what is suitable for you, Manual or Software. So keep up to date and safe records as at the end it will help you for getting business analysis, from where business is growing and where is the threat. How much profit and how you can increase it.







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