A bookkeeper’s role goes far beyond creating and calculating the profit and loss statement. It also involves handling client accounts payable. Bookkeepers are responsible for noting payment deadlines from vendors, early payment discounts, and other details. The bookkeeper submits payments to vendors and may add additional approvers to the invoices to ensure that the accounts are paid on time. Accounts payable are important for keeping good relationships with suppliers and positive trade credit terms. If you are new to bookkeeping, you can also get help from bookkeeping and accounting firms in Abu Dhabi.
Recording financial transactions:
Recording financial transactions start with analyzing and organizing the data gathered from the first step. Every business activity that impacts the financial statements is recorded. The information used to record the transaction comes from the source, which is the journal. Journals are also called general journals, books of original entries, or cash register tapes. Then the information is consolidated to produce financial statements. Recording financial transactions are essential to the success of any business.
Making adjusting entries:
When a business makes adjusting entries, it updates the unattended accounts in the period or those that were not yet recorded. In other words, adjusting entries make the accounting equation more accurate. The purpose of adjusting entries is to update the financial statements to reflect the income and expenses of the company accurately.
Adjusting entries are made in a journal to reconcile financial information in the bookkeeping process. Receipts of invoices or supplies trigger these journal entries. This is different from cash receipts. Cash received, or unearned revenue is recorded in a separate account. Accrued revenue is recognized in a later period. Regardless of the accounting method used, adjusting journal entries is important to financial statements’ accuracy.
The closing entries in the bookkeeping process journal entries transfer balances from temporary accounts to permanent ones. These entries reset temporary account balances to zero and move them into permanent accounts on the balance sheet. The purpose of closing accounts is to provide a detailed record of a company’s retained earnings, revenue, and expenses. The closing entries also apply the assumption of the period to accounts. This way, an organization can compare and contrast performance across accounting periods.