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Maintaining accounting books
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Accounting books are a record of all financial transactions that a business makes. They are used to track income, expenses, assets, and liabilities. Accounting books are important for several reasons, including:
- They help to ensure that financial information is accurate and complete.
- They provide a historical record of a business's financial performance.
- They can be used to prepare financial statements, such as balance sheets and income statements.
- They can be used to file taxes.
There are following key aspects of maintaining accounting books are:
- Identifying the transaction through an original source document and determining which accounts are affected and by how much
- Making a voucher with details on date, amount, description, name and particulars of the party
- Making entries in the books of accounts or accounting records like cash/bank book, ledger, etc.
- Making entries in other memorandum records like fixed asset register, advance register, etc. if applicable
- Following the key accounting policies and principles for recording transactions
- Closing the books of accounts on a periodical basis and reconciling them with bank statements
- Preparing key financial statements like income and expenditure statement, balance sheet, etc.
- Following the prescribed formats for books of accounts and financial statements
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