Basic Day to Day Bookkeeping Principles

Accounting entails carefully recording, classifying, and summarizing company activities so that businesses may understand critical information such as profit or loss, cash position, and financial health. These measured activities are known as bookkeeping principles and like anything else, there are these bookkeeping rules must be followed.

Principles of Bookkeeping

The fundamental goal of bookkeeping is to keep track of a company's financial transactions and information daily. Individual financial transactions are kept up to date and thorough using bookkeeping techniques to submit data, which helps create accounts. You have a few more vital things to worry about as a business owner than bookkeeping. The routine task of recording every financial transaction of a business and maintaining the books of account is known as bookkeeping. Efficient bookkeeping is unquestionably necessary to trace the movement of funds in and out of the company.

Also, it is critical to keep track of finances. However, doing it yourself isn't always the best option. Daily bookkeeping responsibilities cover a wide range of topics. What are the day-to-day bookkeeping responsibilities? What transaction necessitates attention weekly? How can one prioritize the tasks monthly, quarterly or annual basis? Because there are so many items to keep track of to stay on top of your accounting records, a bookkeeping task list or checklist will come in handy.

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Why do we require a bookkeeping checklist?

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A bookkeeping checklist is helpful for a variety of reasons. Let us know how it works out for you:

It organizes everything: A bookkeeping checklist helps keep track of the business finances. It facilitates understanding what needs to do daily and how to schedule it on time. On the to-do list, you can cross off each job you've completed.

It makes sure that nothing is missed: On a daily, weekly, monthly, quarterly, and annual basis, bookkeeping entails doing numerous accounting activities. As a result, there are multiple items to keep track of for the firm to run well. A checklist ensures that no details have been overlooked and that all activities get completed on time by following the double-entry principles.

It's simple to share or delegate accountability: A checklist might assist you in delegating or sharing bookkeeping duties. It even facilitates hiring expert bookkeepers or CPA firms to handle your bookkeeping.

Daily bookkeeping task:

• Keeping an eye on the cash balance
• Keeping track of the business' cash inflows and outflows
• Keeping track of the cash on hand
• Updating incoming and outgoing payment records
• Preparing invoices and sending them on time
• Sending the invoice to the correct location.

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Weekly bookkeeping tasks:

• Following up on the payments on client invoices
• Depositing all for payment clearance
• Reconciling your business bank account and credit card balances
• Reviewing the invoice and starting the payment process
• Adding the purchase receipt to the accounting software

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Monthly bookkeeping tasks:

• Processing and withholding accurate payroll and taxes, respectively
• Examining the financial results at the end of the month
• Reviewing and following up on accounts receivables to expedite payment
• Examining the company's expenses

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Quarterly Bookkeeping task:

• Preparing financial statement, which includes the Income Statement, Balance Sheet, and Cash Flow Statements
• Maintaining reports on Accounts Payable and Accounts Receivable
• Calculating the quarterly tax
• Filing the payroll tax returns

A bookkeeping job entails more than just documenting financials; it also necessitates a thorough comprehension of accounting ideas and principles.

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Let's have a look at some distinct bookkeeping principles

• Revenue Principle of bookkeeping
• Expense Principle of bookkeeping
• Matching Principle of bookkeeping
• Cost Principle of bookkeeping
• Objectivity Principle of bookkeeping

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1. Revenue Principle:- The revenue principle establishes a point when a transaction can be recorded as 'revenue' in the books. For example, it states that income is earned and recorded at the point of sale for the firm. As per the principles of double-entry, revenue comes when a customer obtains legal possession of the object sold or when the company renders a service. This means that the revenue does not necessarily occur when the seller accepts cash for the transaction. It is thus, also known as the revenue recognition principle.
2. Expense Principle:- The expense principle refers to the moment when a transaction can be recorded as an expense in the books. In other words, it specifies that an expense happens when a company accepts goods or services from another company. The expense principle assumes that expenses occur when items are received or services are rendered, even when those expenses have not been billed or paid by the business.
3. Matching Principle:- The matching principle states that all associated expenses should be recorded at the same time as recording revenue. Thus, it records the cost of goods sold and the revenue generated from it in the inventory book and maintains the double entry principle.
4. Cost Principle:- This theory argues that instead of using the resell cost, the historical cost of an item (as mentioned in the books) needs to be utilized. If a company has property, such as real estate or vehicles, those assets should be recorded at their historical costs rather than their present fair market value.
5. Objectivity Principle:- This principle suggests that one should always use factual, verified data and never employ subjective value measurements in the books. Even though the subjective data appears to be superior to verified data, the latter should always be employed.

In addition to these fundamental bookkeeping principles, accountants function under a set of assumptions or things that seem accurate in all possible situations.

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