What Is Bookkeeping?
Bookkeeping is how you record and report on the financial transactions of a business. The bookkeeper is responsible for initially recording basic accounting transactions, such as issuing invoices to customers, recording cash receipts, and paying employees. Bookkeeping is rarely conducted entirely on paper anymore. Instead, the bookkeeper uses a low-end accounting software package to record transactions. The software makes it easier to record transactions, and also summarizes the information into financial reports that are useful to the owners of the business to see how it is operating.
What Is the Job Description of a Bookkeeper?
The following is a detailed description of the tasks for which a bookkeeper is responsible. These line items may vary somewhat for companies located in specialized industries, but the description covers the bulk of all bookkeeper activities.
Basic Function
The bookkeeper position creates financial transactions and creates financial reports from that information. The creation of financial transactions includes posting information to accounting journals or accounting software from such source documents as invoices to customers, cash receipts, and supplier invoices. The bookkeeper also reconciles accounts to ensure their accuracy.
Principal Accountabilities
Purchase supplies and equipment as authorized by management.
Monitor office supply levels and reorder as necessary.
Tag and monitor fixed assets.
Pay supplier invoices in a timely manner.
Take all reasonable discounts on supplier invoices.
Pay any debt as it comes due for payment.
Monitor debt levels and compliance with debt covenants.
Issue invoices to customers.
Collect sales taxes from customers and remit them to the government.
Ensure that receivables are collected promptly.
Record cash receipts and make bank deposits.
Conduct a monthly reconciliation of every bank account.
Conduct periodic reconciliations of all accounts to ensure their accuracy.
Maintain the petty cash fund.
Issue financial statements.
Provide information to the external accountant who creates the company’s financial statements.
Assemble information for external auditors for the annual audit.
Calculate and issue financial analysis of the financial statements.
Maintain an orderly accounting filing system.
Maintain the chart of accounts.
Maintain the annual budget.
Calculate variances from the budget and report significant issues to management.
Comply with local, state, and federal government reporting requirements.
Process payroll in a timely manner.
Provide clerical and administrative support to management as requested.
Desired Qualifications
The bookkeeper candidate should have an associate’s degree in accounting or business administration, or equivalent business experience, as well as a knowledge of bookkeeping and generally accepted accounting principles. Preference will be given to candidates with a working knowledge of the accounting software package.
What Is a Certified Public Accountant?
A certified public accountant (CPA) is an accountant who has passed all parts of the CPA examination, as administered by the American Institute of Certified Public Accountants, and who has also completed all additional work and educational requirements of their local state accounting regulatory agencies. A CPA is authorized to render an opinion on the fairness of a client’s financial statements.
What Is a Transaction?
A transaction is a business event that has a monetary impact on an entity’s financial statements and is recorded as an entry in its accounting records. Examples of transactions are acquiring property or paying supplier bills.
What Is the Accounting Cycle?
The accounting cycle is a sequential series of activities to identify and record an entity’s individual transactions, which are then aggregated at the end of a reporting period into financial statements. The accounting cycle for individual transactions is:
Identify the event that is causing an accounting transaction.
Prepare the business document associated with the accounting transaction, such as a purchase order, customer invoice, or cash receipt.
Identify which accounts are affected by the business document.
Record the amounts noted on the business document in the appropriate accounts in the accounting database.
The preceding accounting cycle steps were associated with individual transactions. The following accounting cycle steps are only used at the end of the accounting period, and are associated with the aggregate amounts of the preceding transactions:
Prepare a preliminary trial balance, which itemizes the debit and credit totals for each account.
Add accrued items, record estimates, and correct errors in the preliminary trial balance with adjusting entries.
Prepare an adjusted trial balance, which incorporates the preliminary trial balance and all adjusting entries.
Prepare the financial statements from the adjusted trial balance.
Close the books for the reporting period.
Prepare and review a post-closing trial balance.
Reference:
Bookkeeping Essentials: How to Succeed as a Bookkeeper by Steven M. Bragg,