If you’ve ever studied accounting in school, you would be at least a little bit familiar with the concept of what bookkeeping is and chances are that you might also find it boring and unnecessary. Many students upon their first encounter of bookkeeping have accused it as seemingly superfluous with all its stringent rules and exact instructions, without which it can tend to fall apart. But that is essentially the secret behind the accuracy and success of the system of bookkeeping when it comes to keeping a record of your finances and operations. So what is bookkeeping, why is it important and why should you care? We’ll address each of these questions with the relevant information down below.
What Is Bookkeeping?
Bookkeeping is an elaborate method that accountants or bookkeepers use to monitor and keep track of financial information pertaining their businesses. It is kept as a record on a daily business and that record is separated according to various functions of the business.
Why Is Bookkeeping Important?
As you can understand by now, bookkeeping is absolutely essential in the role that it plays to organize, track and monitor an organization’s financials. Such a rigorous system is positively necessary for a department like financials because the financials are an absolutely crucial to the organization’s progress.
Bookkeeping is an old method of accounting for your businesses’ cash, equity, capital, non-cash assets, liabilities and everything relevant to the business’s financial operations. It has been around for a long time, which is also why numerous amendments have been made to the rules of accounting over the years, making it more accurate and relevant to an honest and fair record of a company’s financials. It is a rigorous system, but it is absolutely pertinent for an organization that wants to keep an organized and accurate reflection of their financials in the form of a record.
Why Should We Care About Bookkeeping?
This question has a two pronged answer. Firstly, if you own a business or want to start a business in the public sector, you are required by law to follow an accounting process with exact rules for bookkeeping for your financials as an honest record to show your stakeholders so that they are able to see the progress of the company that they have invested in.
Secondly, if you want to invest in a business, you would want to be shown an accurate picture of how much return you can expect on your investment. So as a stakeholder, bookkeeping information is also very crucial.
In Conclusion To conclude, we hope you now understand the importance of bookkeeping in the world of business as well as life. The need for a stringent and rigorous system that assures every one of the authenticity, fairness and accuracy of the picture of how a business is doing, is why bookkeeping was invented and continues to have the place it does in the world