The Basics of Bookkeeping & 1300bpo’s Contribution

Bookkeeping is simply the act of recording a business transaction. That’s it, nothing more, nothing less.

Here are few concepts that would allow you to understand What Bookkeeping is?

Double entry concept

Business transactions have two aspects, the giving aspect and the receiving aspect. Think of it as when someone gives, another receives. These two aspects are named Debit (the receiving aspect) and Credit (the giving aspect).

So in recording a transaction, you need to ask yourself who is giving and who is receiving. For instance, if you pay salary to your employee, the bank is the giving aspect, and the employee is the receiving aspect. Easy huh?

Debit aspects are recorded on the left and credit on the right.

Account

Most business transactions can be grouped together. For instance when you pay an employee, or your utility bill or your creditor, the common giving aspect here is the bank (assuming you make all these payments by cheque).

For transactions that occur regularly, we create an account so that we can group or categorize them. An account is essentially a name that describes the transaction, for example, we would name banking transactions with the name of the bank that we maintain an account with. (See some similarity here? Banks create an account with our name when we when we open an account with them.) So if your bankers were XYZ Bankers Ltd, you would name the account “XYZ Bank” or to that effect.

Grouping of transactions is relatively straight forward, and depends on the depth of information you require about your business. For instance, you pay for electricity, water and telephone. If you absolutely need to know what the business expended on each, you would create an account for each. In practical terms it would be more prudent to group all 3 under an account called “Utilities” or simply “Electricity, water and telephone”.

On the same note, payment of salaries can be grouped under one account rather than in separate accounts for each employee.

Why group transactions?

We group transactions so that we can obtain information about the business. Transactions, if not grouped, do not offer information. It’s nothing more than a list of transactions that need to be analyzed further if any sort of meaningful information is to be gleaned from it.

If we grouped them however, we would be able to extract meaningful information such as how much was expended on rental or what was the total sale this month?

Is that it?

Well, yes and no. There is much more to bookkeeping than just debits and credits, but this is the basis of everything else. Still confused don’t worry 1300bpo can help you remove your bookkeeping anxieties and maintains your accounts at a fraction of what it normally costs. This service is focused on small-midsized businesses and helps YOU reduce your expenses, increase profits, improve cash flow and deliver financial peace of mind.

Benefits of 1300bpo’s Bookkeeping service:

* Decreased bookkeeping costs – more profit for your business

* Speed up compliance and information processes – making your business more efficient

* No industrial risks as we are your contractors and not employees

* Increased business growth

* Fast turnaround times, reliable service, 24/7 online access to your accounts

* Electronic storage of information recognised as legal documents by all relevant authorities, freeing your valuable office space and being readily accessible by indexing.

To know more on how 1300bpo’s bookkeeping service works Click Here.