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Book-Keeping

Book-keepers are the unsung heroes of the accountancy world. It is their hard work and dedication that allows the glamour boys (and girls) at the top end of the profession to gain all the plaudits for producing highly detailed financial accounts and tax returns. Whilst that description may be slightly over the top, it does highlight the importance of getting the fundamentals right, because if the accounting records themselves are not properly prepared, the accounts derived from them will also be wrong.

Double-entry book-keeping has been around for hundreds of years. The first evidence of its use dates back to the year 1211 in Florence, Italy. However, it was not until the year 1494 that the double-entry system was first codified by an Italian monk named Luca Paciola in a book called Summa de Arithmetica, Geometrica, Proportioni et Proportionalita (Everything about Arithmetic, Geometry and Proportion). Paciola recognised that every commercial transaction must be recorded in the books as both a debit and a credit, so that when the debits and credits are all added up, the totals must be the same. That is still the case today and underpins the concept of the Trial Balance. The basic principles of double-entry book-keeping have changed very little since Paciola wrote his book, although the methods used to apply them have of course changed out of all recognition.

An accounting system revolves around keeping ledgers to record every transaction, from the largest sale to the smallest petty cash expense. At the heart of any accounting system is the Cash Book. This records details of every financial transaction and allocates them to the various ledgers. The Sales Ledger, Purchase Ledger and Nominal Ledger are the main ones but there are many other sub-ledgers that also need to be maintained such as the fixed asset register, the stock records and various control accounts. The book-keeper must be able to reconcile these so that the balances match the amounts that actually exist.

A good book-keeper should possess the technical knowledge required to produce accounts up to trial balance stage. In addition, book-keepers must have sufficient knowledge of the business they are working for to understand the transactions themselves and how they should be recorded in the books. It is also important for there to be a proper audit trail so that you can drill down into the accounting records and see exactly what each account consists of and where the items originated.

At Acumen, we can either do your book-keeping ourselves on a weekly or monthly basis or train your staff to do it as an ongoing daily task so that the accounting records are fit for purpose when you come to do your statutory or management accounts. Please give us a call if there is anything we can do to help you with your book-keeping.

The following information sheets and accounting tips will provide further details:

Information Sheets Accounting Tips
bulletpoint Sales ledger
bulletpoint Purchase ledger
bulletpoint Nominal ledger
Expense codes
Review all expense codes and raise journals to correct transactions that have been incorrectly posted.
Accruals and prepayments
Ensure your accruals and prepayments are updated each month so that the management accounts are correct.
Depreciation
Run your depreciation calculations monthly so the P&L account always shows the correct charge for the year to date.
Bank reconciliations
Do your bank reconciliations at least monthly and ensure outstanding credit card receipts are recorded for the correct number of days.
Foreign currency
Calculate gains and losses on transactions in foreign currencies and update your exchange control accounts.
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