Basic Accounting Principles for Real Estate Professionals
Most people probably think of bookkeeping and accounting as the same thing. Bookkeeping is one function of accounting. In contrast, accounting encompasses many processes involved in managing financial affairs. Accountants prepare reports based, in part, on the work of bookkeepers.
Bookkeepers perform all manner of record-keeping tasks.
5 Key Bookkeeping Tasks Are:
1. They prepare what source documents for all the business operations – the buying, selling, transferring, paying, and collecting. The documents include purchase orders, invoices, credit card receipts, timesheets, and expense reports. Bookkeepers also “code” and enter the source documents reflecting the financial effects of the transactions and other business events. These include paying the employees, making sales, borrowing money, buying products, or paying for services.
2. Bookkeepers also make entries of the transactions into journals and accounts. These are two different things. A journal is the record of transactions in chronological order. An account is a separate record or page for each asset and liability. One transaction can affect several accounts.
3. Bookkeepers prepare reports at the end of a specific period, daily, weekly, monthly, quarterly, or annually. All the accounts need to be up to date to prepare the reports accurately. The business must update inventory records and the reports checked and double-checked to ensure they’re as error-free as possible.
4. The bookkeepers also compile complete listings of all accounts. This comprehensive listing of accounts is called the adjusted trial balance. While a small business may have a hundred or so accounts, substantial companies can have more than 10,000 accounts.
5. The final step is for the bookkeeper to close the books, which means bringing all the bookkeeping for a fiscal year to a close and summarized.
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