Book keeping is basically the record keeping of financial transactions, which is a part of the process of financing in most business establishments. It is very much essential because of the fact that the business owners have to understand the way that the money is used in the business. Transactions involve the payment, purchase, and sale of any item that a person uses or buys, in order for them to make their profit. The book keeping can also help in analyzing the performance of a business or an entity that an owner is running.
Most business owners would really love to understand how their business works. As they have to know the processes involved in the operations of their business, it will be easier for them to monitor the progress of their business. In a business, book keeping is a vital part of it. A good book keeping system is a must. Otherwise, if a business owner makes mistakes in the book keeping, it may give bad results to him.
There are many types of book keeping systems that an owner could use to maintain his business. Book keeping is the most basic part of a business. However, it is also the most expensive and complicated to use. The following are the types of book keeping that an owner could use.
This type of book keeping is used for a business that is new. In this type of system, the owner can keep all the records about his business on one sheet of paper. Every transaction that a person has is recorded on this sheet. This type of book keeping can also help a business owner if he is using an electronic method of communication.
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A ledger book is the oldest type of book keeping that an owner could use for his business. These books are generally found in banks or in other places where banks are used. The contents of these books are organized in rows or columns. The owner will then use these books in order to keep track of his financial transactions with the help of a check book and a journal.
The cash register is the latest type of book keeping that an owner can use in his business. This type of book keeping is actually a computerized bookkeeping system. In this book keeping system, all the transactions in a business will be recorded in the form of columns. A receipt will be given to the person who sent the cash into the account or will be given to the person who received the cash from the customer. A bank clerk will use this book keeping system in order to calculate the profit and loss that a business is making from its transactions.
The financial statements are also included in the forms that this type of book keeping uses. These financial statements include all the data that a businessman needs to know about the money that has been received or paid into his accounts. Some of the financial statements will include the balance sheet and the income statement. In this type of book keeping, the owner of a business will also be able to view his expenses.
Another type of book keeping that is also used is called tax return book keeping. This is also a type of book keeping that an owner can use in order to keep track of his tax returns. All the records that he uses in order to keep track of all the taxes that have been paid by his business are on this type of book keeping.
