Bookkeeping is the foundation of accounting and is the first step in the accounting cycle. I hear from many small business owners that they lack confidence accounting reports are reliable. Is the AP report correct? Depends on if bookkeeping was done correctly. Are Financial Statements dependable? Depends on if bookkeeping was done correctly. Can you trust that your Liabilities are accurately reflected on your Balance Sheet? Only if you trust your bookkeeper entered the transactions accurately and timely.
A bookkeeper’s place on the financial team is extremely important. A knowledgeable bookkeeper must be aware of transactions that involve both the Balance Sheet as well as the Profit and Loss statement (or Income Statement). Bookkeepers must know about accruing for expenses and deferring revenue of reports are to reflect information that is useful for budgeting.
When the recording of transactions is complete, accurate and timely, only then is accounting analysis useful for making business decisions.
