Whether you keep your books yourself or hire someone to keep them, certain elements are fundamental to proper bookkeeping. Some of these elements are done more regularly than others to ensure books are always up to date. Other elements are completed within a specific time period required to complete the business task.
Bookkeepers use journal entries to record debits and credits. Every financial transaction should have a line item in the general ledger, which tracks everything in one place. The general ledger indicates the account number to which the debit or credit applies. The best accounting software automates many of the routine debit and credit processes in journal entries to help eliminate errors that can occur in data entry.
If not completed at the time of the transaction, the bookkeeper will create and send an invoice for the funds that need to be collected by the company. The bookkeeper enters relevant data such as date, price, quantity and sales tax (if applicable). Once this is done in accounting software, an invoice is created and journal entries are made, the cash or accounts receivable account is debited, and the sales account is credited.
Prepare basic financial statements
Since accountants and business owners use the information collected in bookkeeping, it is the basis for generating all financial statements. Most accounting software allows you to automate common financial statements such as income and expense statements, balance sheets, and cash flow statements. Business owners or accountants can then use these reports to gain insight into the financial health of the business.
At the end of each pay period, bookkeepers will accumulate employee payroll details, including hours worked and rates. From there, gross pay is determined by applicable taxes and withholdings. Salary completed and issued. In accounting software, the primary journal entry for gross payroll is a debit to the compensation account and a credit to cash.