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Accounts practice:Introduction to Bookkeeping


Before computers were in common use, bookkeeping was done by an actual bookkeeper. This person kept a company's day-to-day financial records by manually recording every business transaction into a journal.

The journal is a book of original entry for transactions. The journal entry included the date, the name of the accounts to be debited and credited, and the amounts.

The bookkeeping process further required that all journal amounts be rewritten in (or "posted" to) the company's general ledger and subsidiary ledger accounts.

With the writing and rewriting of so many amounts (as well as the manual calculations) it was realistic to assume that some errors would occur in the bookkeeping process. This potential for errors created the need to periodically "prove" that a company's accounts were "in balance," meaning the total of the debit balance accounts was equal to the total of the credit balance accounts. An internal document called a trial balance was designed to give that proof. If the trial balance did not balance, the bookkeeper had to go back, transaction by transaction, to find and correct the cause of any disparity. Once the trial balance was in balance, the bookkeeping phase was completed and the "books" were turned over to the company's accountant for the preparation of financial statements.

Having understood the basics of book keeping, we now go into the practical office book keeping. In a typical office account setting, provision should be made for the following documents;

1. Cash/Bank book/Ledger.

2. Payment vouchers.

3. Receipt booklet.

4. Journal voucher.

5. Invoice booklet (trading and service company)..

6. Cheque register.

7. Forms for check and balance (internal controls) such as payment requisition form, summary of expenditure form, etc.

8. Operation Manual.

9. Financial/accounting policies.

8. Accounting software/packages

With the fast pace of computerisation in the financial sector it will be necessary that office procedures should be computerised as well. Hence, the need for an accounting package.

The type of accounting package to be adopted by an entity will depend on the size and mode of operation and whether it is for profit on not for profit.

Accounting packages will be discussed fully in subsequent post
In the event of having challenges acquiring an accounting package, Microsoft office Excel can come in handy as it can perform all tasks embedded in most if not all accounting packages. All you need do is design finance and account template to suite your line of business.

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