Let us know, as to, What are the top 10 features of bookkeeping? How these features are useful in bookkeeping work.
The main feature of bookkeeping is to record financial transactions, maintain books of accounts, prevent & detect frauds/errors, and do payroll accounting.
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Bookkeeping is the process concerned with the systematic recording and classification of financial transactions of an organization in a systematic manner. It is the record-keeping function. It also concerns itself with the classification of financial transactions and events. It is the recording phase of the accounting system.
The Top 10 Features of Bookkeeping are:
There are many features in Bookkeeping but the most important features are mentioned below.
The complete Record of Financial Transactions: One of the most important features is to record financial transactions in a systematic manner. There are many methods of bookkeeping. The most common ones are the double-entry system and the single-entry system. of record keeping. These are two types of record keeping. All the business transactions are recorded in a book called Journal. These recorded transactions are posted to Ledger and balanced to extract the ledger account balances. Trial Balance is prepared to depict these ledger account balances. Financial statements are prepared using Trial Balance to depict the financial performance & position of a business enterprise
Collecting and Producing the Source Documents: The second most feature is collecting the relevant source documents and producing the source documents such as vouchers, sales memos etc.,. This is the clerical work assigned which involves collections of source documents like purchase receipts and producing vouchers for such transactions to give evidence to transactions taking place.
Maintaining the Journals, Ledgers, and Subsidiary Books: The second most important feature is to maintain the books of accounts such as the Journals, Ledgers, and Subsidiary books. This is the main work that involves storing, maintaining, and safeguarding the books of accounts for preparing and presenting financial statements and completing the Audit work.
Maintaining other source documents and books of accounts: The most important feature is maintaining the other books of accounts and source documents to evidence that a transaction has taken place on a particular date. These source documents help in preparing the vouchers, passing journal entries, posting them in ledger accounts and balancing the ledger accounts.
Recording the financial transactions in Journal: To record transactions in Journal we use double-entry accounting. Double-entry implies that transactions are always recorded using two sides, debit and credit. Debit refers to the left-hand side and credit refers to the right-hand side of the journal entry or account.
Posting the recorded transactions to relevant Ledger Accounts: The next step after recording in the journal is to transfer them to the relevant ledger accounts. This process of transferring transactions from journal to relevant ledger accounts in the ledger is called Ledger Posting.
Balancing the Ledger Accounts: The important feature is to balance the ledger accounts by the bookkeeper which may give the debit balance or credit balance of the ledger account. Balancing the ledger accounts involves totalling both sides of an account and balance them to tally both sides of an account. This gives either debit or credit balance of an account.
Classifying the accounts as Expense, Income, Asset, Liability: The important feature is to classify the accounts as Expense, Incomes, Liabilities, Assets, Equity capital as well. Each transaction has a dual effect such as debit and credit. These are classified as per the rules of the double-entry system. Thus each account may be an asset or liability to the business entity.
Prevention and Detection of Frauds and Errors: The important feature is to prevent and detect frauds and errors to maintain the accuracy of books of accounts. It helps in identifying the principal errors, clerical errors, error of Commission, error of omission. Accordingly, it helps to rectify such errors by passing rectifying entries.
Completing the process of Payroll Accounting: The feature of bookkeeping is that the bookkeeper also completes the process of payroll accounting which is a vital aspect and helps in completing the payroll work as well.
Thus these top 10 features of bookkeeping are mainly concerned with producing source documents, recording the financial transactions in books of accounts, and completing the payroll.
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What is Journal? Its features, types, Objectives and uses
What are Financial Statements? Its features, types, uses
What is Income Statement (Profit and loss a/c)?
What is Balance Sheet (Position Statement)?
What are Subsidiary Books? Its features, types, objectives, uses
What is Single Entry System? Its features, types, objectives, uses
What is Double Entry System? Its features, objectives, uses
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