As the very name suggests, bookkeeping is the combination of two words “book,” and “keeping.” The “book” conveys the concept of a trader’s account books, and “keeping” implies acceptably preserving such account books. Therefore, the term “bookkeeping” means a trader’s method of keeping account books systematically.
Bookkeeping’s early history is as old as human civilization. Through the progressive development of human culture, it has steadily gained its present status.
As a society member, man needs other people’s goods and services. Any such exchange brings about specific financial changes for the parties concerned. Perhaps the idea of bookkeeping emerged to record the influence of the parties involved in a transaction’s economic and financial adjustments.
With the discussion above, we can say that bookkeeping is a method of permanently tracking financial transactions in the books of accounts in a scientific way to manage assets, liabilities, profits, and expenses. So, bookkeeping requires the following items:
- The analysis of financial transactions.
- The routine and correct recording of financial transactions in the books of accounts.
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