Accountancy Services Explained - Bookkeeping

Out of all the accountancy services available, bookkeeping is most probably the most well known and also the most important. Bust what does it involve?

The main function of bookkeeping services is to create an accurate record of all the businesses financial transactions.

All business (financial) transactions will be summarised in the sales, purchase and nominal ledgers. Many accountancy services use an electronic version of these ledgers to input the transactions. The inputting of this information is a critical role and any business needs to ensure this is done accurately.

The information to add into the sales, purchase and nominal ledgers can be taken from a number of different daybooks in which specific information is recorded. For example, the Sales daybook (where all sales are recorded) and cash book (for recording receipts relating to the payment of cash and cheques). Most accountancy services will be able to advise you on what daybooks your will need to setup for your business bookkeeping system. Some businesses will not need any manual daybooks and may possibly be able to record all transactions electronically.

The sales ledger records all information relating to customer accounts. This can include total sales to date, amounts due and receipts taken.

The purchase ledger records all information relating to supplier accounts, for example total purchases, amounts outstanding to be paid and payments made.

The nominal ledger records everything, including expenses, fixed assets, capital etc.

As there are many different daybooks and ledgers in bookkeeping, most accountancy services providers refer to these collectively as 'the accounts'.

Arguably the most important ledger for an accountant and business owner is the nominal ledger as it provides a financial summary of the business. It is also used to help produce monthly, quarterly and annual financial reports. These reports can be used internally to make key business decisions, or externally to obtain finance for example. The nominal ledger itself will be discussed in further detail in a separate article.

Bookkeeping can also be used to manage daily finances, by tracking stock levels, sales and managing payroll.

Most accountancy services provide bookkeeping services, as a business owner it is vital that these processes are managed correctly to support the growth of your business.

Should you wish to have Accountancy Services Direct provide a free review of your bookkeeping systems, or to discuss anything else contained above then please contact us.