Bookkeeping is the
process of recording financial transactions to maintain accurate and up-to-date
financial records. It provides the basis for preparing financial statements,
tax returns, and making informed decisions. The objectives of bookkeeping are
as follows:
- Recording financial transactions: Bookkeeping
helps to record all financial transactions in an accurate and systematic
manner, which provides the foundation for financial reporting.
- Keeping accurate records: Bookkeeping
provides an accurate record of all financial transactions, which helps in
detecting errors and preventing fraud.
- Facilitating decision making: Accurate
bookkeeping provides the necessary information for management to make
informed decisions regarding the financial position of the business.
- Compliance with laws and regulations:
Bookkeeping helps to comply with tax laws and regulations, including
keeping records for tax purposes and submitting tax returns.
- Facilitating budgeting and forecasting:
Bookkeeping provides the historical data required for budgeting and
forecasting future financial results.
- Evaluating business performance: Bookkeeping
provides the data required to measure business performance, such as profit
and loss, and to identify areas for improvement.
- Support for internal and external audits:
Accurate bookkeeping provides the necessary information for internal and
external audits, and helps ensure that the financial records of the
business are reliable.
Overall, bookkeeping
plays a crucial role in maintaining accurate financial records and providing
the necessary information for decision making, compliance with laws and
regulations, and measuring business performance.
