Basic Bookkeeping

Basic Bookkeeping


Bookkeeping - definition

Book-keeping is the recording of all financial transactions undertaken by a business 

(or an individual). A bookkeeper (or accounting clerk) is a person who keeps the books of

an organization. The organization might be a business, a charity or a local sports club. 

Why Keep Records?

Good records will keep you informed about the past and present financial position of

your business.

Good records will keep you in control and give you the information needed to make

good business decisions.

Good record keeping increases a new business' chances of survival and an established

business's chances of staying in business and earning good profits.

  

Setting Up a Record Keeping System

(We are assuming the start of a new small business)

Steps:

Register your business name with the Corporate affairs commission.

In order to keep your business separate from your personal affairs, open a separate
business account at your local bank. Order numbered cheques with stubs to record
cheque details and obtain a deposit book. With this type of account, ensure that your
bank will be mailing you a statement along with your canceled cheques every month
so that you can perform bank reconciliations.

What Record Keeping System Should I Use?

• A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.
• The legal requirement concerning financial records specify only that they be a permanent, accurate and complete record of your daily income and expenses. 
• There are many types of record books and bookkeeping systems available. For example:

• Double Entry Bookkeeping— this is the system taught in most high school and college bookkeeping and accounting classes. Each transaction is recorded twice, one account is credited with the given Naira amount and a second account is debited by an equal naira amount. This is an excellent system but often formal training and practice will be needed to understand and master it.  

• One-Write Systems— these are copyrighted systems that are set up using carbon-backed cheques. As you write the information on a cheque, it also transfers the data to a record system.

• Computerized Systems— there are several excellent programs available. These programs offer the speed and capacity of computers as well as the ability to produce daily updated financial statements. One should be careful, however, that they are not buying expensive software programs or computer equipment that has more capacity than they need. Most small businesses grow into the need for a computerized system; usually as a means to control larger volumes of inventory or transactions.

• Single Entry bookkeeping— a single entry system means every naira transaction is recorded only once, either as income or expense, an asset or a liability. All entries are recorded on a one page synoptic journal or also called a revenue and expense journal. The system is simple, easily understood, and thus requires little training. 

   I hope this information is usefull?

  More post coming!