Bookkeeping is a method of keeping track of money, i.e., how money is earned or obtained,
and how it is spent or given. The whole exercise eventually gives an idea about how much profit the business has earned or how much loss it is making. Non-profit organizations do not earn any distributable profits. Therefore, whatever remains in their books, after paying all dues, is referred to as Surplus, and if they are spending more than what they are receiving, then it is referred to as Deficit. Bookkeeping is also necessary in personal accounts. Even though there is no profit and loss at personal levels, keeping an account of all debts and liabilities is a worthwhile exercise. Keeping personal accounts helps in proper tax planning, and getting loans.
Most people do not know the difference between accounting and bookkeeping. Bookkeeping is the basic level of accounting. It starts with preparing vouchers, and making relevant entries in the books of primary entry. From here, the information is posted into books of secondary entry. After this, totals are drawn up, and net effect is extracted as trial balance. The job of accountant starts after preparation of trial balance. The accountant clubs various heads available in trial balance in a meaningful way, so that the stakeholders can understand this information. Businesses prepare profit and loss accounts and balance sheets from the trial balance, whereas not for profit organizations prepare receipts and payments accounts from the trial balance. Effectively, information from invoices and vouchers passes through books of primary entry, books of secondary entry, trial balance, and profit and loss or receipts and payments to reach the balance sheet stage.
The books of primary entry are cashbook, (including bank book), petty cash book, purchase register, sales register, and journal. Each entry has a debit aspect, and credit aspect. This is known as the double entry system. The thumb rule followed by bookkeepers is debit the account in which something comes in, and credit the account from which something goes out. The something here may be cash, or other physically perceivable asset or liability. For this system, Credit as in case of creditors also is deemed as something. Therefore, when a business borrows, cash comes in, and credit goes out. But that is not all. Cash is received for some purpose, and that purpose becomes important. Suppose a business receives monies towards share capital from somebody. The books would show receipt of cash in cashbook, towards the left part of the book. But the account head mentioned would be share capital. Cashbook is also a type of ledger account with debit and credit columns. The debit side of the cashbook is called the receipts side, and the credit side of the cashbook is the payments side. For completing the double entry, the amounts are posted into a ledger account, i.e., the general ledger. Relevant account is created as Share capital. What appears on the debit or left side of the cashbook goes into credit or right hand column in the general ledger. Vice versa, the entries towards the right in the cashbook are posted towards left in the general ledger account. This is how the double entry is completed. Double entry system is the most commonly followed bookkeeping and accounting system. In so far as purchase registers and sales registers are concerned, they are more like tabulation. They contain details about credit purchases and credit sales. Whereas vouchers become the source of information for cashbook, in case of purchase and sales registers, it is the invoices. The name of the creditor, i.e., the supplier of raw material, is written in the row. There are several vertical columns, each representing a type of raw material. The consolidated bill amount is mentioned in the total column. Relevant information is picked from invoice and posted under the specific raw material column. Sales registers are also similar. In this, debtor, or the person to whom the goods produced by the business are sold is mentioned in the row. Petty cash book is also similar. The tabular forms are maintained and at the end of the month, total purchases or sales for the month are posted in ledger. As to corresponding double entry, individual creditors' or debtors' accounts may be opened in general ledger, or a separate creditors ledger, and debtors' ledger. Purchases are debited, and sales are credited. Individual supplier from purchase register is credited, whereas individual buyer from sales register is debited. Journals are special type of books. In this, both debit and credit of double entry are recorded in the same book. There are journal vouchers that contain the information for journal. Entries from journal are also posted into ledger.
Bookkeeping job is a very basic level job in accountancy profession. The bookkeeper is not expected to know how to pass closing entries and tax entries, though such knowledge certainly helps. It is the accountant who takes up from where the bookkeeper leaves, and presents the information to whosoever needs it. There are online bookkeeping jobs, as well as part time bookkeeping jobs.