Bookkeeping refers to the process of a business making a record of its financial activities, with every transaction included. The process of checking this data, and using it to calculate certain ratios and other quantitative information is the process known as accounting, and has a slightly separate career path. Bookkeepers essentially focus on the recording of the data for potential use of an accountant later on, however, as the two roles overlap, many people move from bookkeeping into more general accountancy later in their career. Initial bookkeeping will be done by entry into what are known as day books. This records the ongoing transactions as they happen, in different categories: sales, sales on credit, purchases, purchases on credit etc. The information recorded in the day books can then be transferred to different ledgers as appropriate, which become the final book of entry. An intermediate Practical Bookkeeping ICB (Institute of Certified Bookkeepers) course, and an AAT (Association of Accounting Technicians) at certificate level will introduce you to these methods.

The double entry process is one of the most important elements to bookkeeping, as it helps to ensure that the information recorded is accurate. All of the information from the day books is entered twice into ledgers - for example, the receipt of £500 might be recorded as a credit to the sales ledger, but as a debit in another separate ledger showing customer expenditure. When accounts are being compiled each month, there should be two records of every transaction, which allows you as a bookkeeper to check for accuracy. The totals of the credit and of the debit ledgers should be equal if the transactions have all been recorded correctly. Often they will not, and taking a bookkeeping course will help you to develop the skills required to check whether there are mistakes, and how to go about locating them. There are also techniques available, to help you account for transactions that are known to be inaccurate or potentially inaccurate - for example, if there are any doubtful debts owed to the company.

Double entry bookkeeping is a necessity for the production of standard accounting documents, such as a balance sheet, profit and loss account or/and income statement. It is used because it allows the accounts to show that a business may have an impressive or healthy profit, but may have a poor or unsustainable cash flow. The method essentially relies on the principle that a loss to one person or account is always a gain to another person or account. The confusing part comes from the fact that you will be recording a 'loss' as part of your accounts when you receive money, and always recording a 'gain' somewhere when money is spent. ICB and AAT courses are designed to give you a good grounding in the process, which will be valued by clients, and by employers in the financial profession. The courses will also familiarise you with the typical layouts of all the different types of accounts you will have to deal with - as different types of transaction are grouped into similar types, which each one being its own 'account' - giving you a thorough and rounded skills base.


Related Courses: ICB Level 3 Professional, AAT Level 2 Certificate, AAT Level 3 Diploma, Sage Payroll Management, ICB Level 2 Associate, Sage Computerised Bookkeeping, AAT Level 4 Diploma, AAT Level 2 and 3, ICB Level 2 and 3, IAB Sage 50 Accounting