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Bookkeeping is the process of recording financial transactions. This is a key part of the accounting process for all businesses. Transactions, which include sales, receipts, purchases, and payments, need to be recorded in order to produce financial reports required to comply with income tax and other regulatory filings. The goal of the bookkeeping function is to produce a trial balance which is then used to produce financial statements. The trial balance accompanied by supporting ledgers can be used for other financial and management reporting. It is important that this process is completed accurately as it builds the foundation for all other work.
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Supporting ledgers may be produced for accounts receivable which would allow a business to generate statements for each customer, accounts payable which would create a record of what is owed to each vendor (this should agree to supplier statements), inventory which allows the business to track what is being purchased and what is used/sold.
Periodic reconciliations are performed comparing various accounts to statements such as bank accounts, customer accounts, and supplier accounts. Additionally, inventory ledgers are reconciled to inventory count sheets.
Bookkeeping also includes recording payroll activities. These are transactions involving employees. This is done to produce paystubs and paycheques, prepare payroll remittances, and for preparing tax forms (T4) for employees.
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