bookkeeping one
Bookkeeping I
Vocabulary
| bookkeeping | system | process |
| analyze | record (4) | summary |
| transaction | other | organization |
| to organize | individual | because |
| provide | order (3) | accurate |
| picture (2) | finance | financial |
| position | profit | loss |
| gain | place | take place |
| close (2) | related | accounting |
| prepare | main/mainly | deal (2) |
| carry out | design | install |
| perform | audit | interpret |
| statement | tax | tax return |
| operate (2) | through | easy/easier/easiest |
| basic | type (2) | hard/harder/hardest |
| asset | liability | equity |
| income | revenue | expenditure |
| resource | usually | own |
| cash | inventory | supply |
| land | building | equipment |
| separate | keep (2) | claim |
| credit | debt | creditor |
| owe | include | accounts payable |
| pay | wage | mortgage |
| general (2) | consist | claim |
| contribute | capital | contributed capital |
| retain | earn | retained earnings |
| expenditure | nominal | nominal accounts |
| considered | part |
Bookkeeping
Bookkeeping is the systematic process of recording, analysing, and summarizing the economic transactions of a business or other organization over a given period.
Organizations and individuals use bookkeeping because it provides orderly and accurate information about their financial transactions. It gives a picture of the financial position, and records the changes in profit, or loss making, which are taking place.
Bookkeeping and Accounting
Bookkeeping is closely related to accounting. Information prepared by a bookkeeper is used by an accountant to prepare accounts.
Bookkeeping mainly deals with recording and analysing financial information.
Accountants
Accountants may carry out this work, but they also design and install information systems, perform audits, interpret financial statements, and prepare tax returns.
Systems of accounts, which may operate through a computer, are designed by accountants to make bookkeeping easier.
Accounts
Bookkeepers record all economic transactions in accounts. The three basic types of accounts are asset accounts, liability accounts, and equity accounts. There are also income (or revenue) accounts and expenditure accounts.
Assets
Assets are the resources used by an organization. An organization usually owns its assets, which include cash, inventory, supplies, land, buildings, and equipment. Separate accounts are kept for the various types of assets.
Liabilities
Liabilities are claims of creditors such as debts owed by an organization. They include accounts payable, wages payable, and mortgages payable, and are generally recorded on separate liability accounts.
Equity
Equity consists of the claims of owners. Such claims include contributed capital and retained earnings. Income and expenditure accounts are sometimes called nominal accounts. They are considered part of the equity of the organization.
Questions
1. What are the processes of bookkeeping? The processes of bookkeeping are….
2. Why do businesses and organizations need bookkeeping? Businesses need bookkeeping because…
3. Are bookkeeping and accounting the same? How are accounting and bookkeeping similar? How do they differ? How are they different?
4. What is an account?
5. Name the three basic types of accounts.
6. Only organizations have assets. True or false?
7. What does “payable” mean?
8. Define the following terms. Give examples of their meaning.
a) equity
b) contributed capital
c) retained earnings
d) nominal accounts
A. Are you a bookkeeper or do you know someone who is a bookkeeper?
B. Do you deal with bookkeepers?
C. How can someone become a bookkeeper?
D. What is the demand for bookkeeping services?
See BOOKKEEPING II.
