Bookkeeping is an essential business process and one that should be done regularly in order to keep a constant overview of the financials.
Bookkeeping is the recording, on a day to day basis of financial transactions undertaken by the business - whether income or expenditure. The objective of the process is to ensure that all incoming and outgoing transactions are recorded and categorised to ensure the financial statements are correct. Bookkeeping provides the source records from which the year end accounts are drawn up.
Double entry bookkeeping is the principle that every single transaction has an equal and opposite entry within the accounts. Thus every transaction involves a credit and debit of the same amount.
For example, a bank charge, in the account records would debit the bank charges category code but also credit the bank account within the accounts. This ensures the accounts always balance.
Previously, bookkeeping was completed manually using ledges, "t-accounts" and lot's of work! Nowadays, accounting systems automate much of the double accounting system and thus work has been reduced drastically.