BOOKKEEPING & ACCOUNTING

BOOKKEEPING & ACCOUNTING

Bookkeeping:

Bookkeeping is a systematic way of keeping records of business transactions on daily basis to enable the business prepare its account and assess its financial performance over a period of Time.

 

IMPORTANCE OF BOOKKEEPING IN SMALL & LARGE SCALE BUSINESSES

  1. It enables the business to have records of its total sales(income) for the day, week, month and year
  2. It enables the business to have records of its total purchase (expenses) for the day, week, month and year
  • It enables the business to know its debtors  at a glance and the total amount they are owing the business
  1. It enables the business to know its creditors at a glance and the total amount they are owing their creditors/suppliers
  2. More importantly, it enables the business to prepare its account.
  3. Others include:
  • Detecting and prevention of fraud, errors and theft.

Consequences of not having a proper booking-keeping records

The business will encounter the following problems:

  1. Inability to prepare its annual account due to incomplete records
  2. It will be difficult to obtain loan from banks
  3. Inability to file annual return with tax authority and pay tax
  4. Inability to get a tax clearance certificate.
  5. The business might be vulnerable to error, fraud and theft.

 

ACCOUNTING:

 

Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and tax collection.

 

IMPORTANCE OF ACCOUNTING

Accounting plays a vital role in running a business because it helps you track income and expenditures, ensure statutory compliance, and provide investors, management, and government with quantitative financial information which can be used in making business decision.

Banks and lenders

To get a loan from a financial institution, you need to provide a financial statement. To make a financial statement, you need to have a proper accounting system. Various books of record such as profit, expenses, assets and liabilities, tax paid need to be maintained. The financial institution will then scrutinize in detail in order to provide a loan to the organization

Records Keeping

The organization needs to have a record of its transaction to run the business smoothly. To do so, accounting plays a key role in keeping records. These records are collected, organized, and then interpreted to communicate to end-users.

Decision Making

Accounting in decision-making plays a key role. For this business, the organization needs a financial statement. A financial statement is made as a result of the accounting system. Executive management cannot make a sound decision if there is no proper record of accounting in business organizations and hence it is impossible for them to achieve objectives.

Investors

Many stakeholders need financial information in the form of a financial statement. Examples of stakeholders that need financial information are investors, creditors, government, debtors, customers, and employees. The investor will move away if the organization is lacking financial records and accounts. They need this information to know about business progress.

The main objective of a business is to make a profit. In order to ascertain whether a business is making a profit or not, just needs to maintain an accounting system regardless of size. This enables interested parties to make a decision on the growth of business output.

Monitoring Cash Flow

Well prepare accounting systems helps in managing working capital requirements and other cash requirements within an organization. Monitoring your cash flow is vital for you to know if your business is struggling or progressively increasing. Keeping track of your in and out money like your bills, employee’s salary, miscellaneous expenses, and etc. will also help you to identify profits opportunities. A good accounting system will lead you to a better understanding of how your business runs.

Statutory Complaint

A proper accounting system ensures timely recording of liabilities and which to be paid within the time frame. This may include pension fund, provident fund, few or all taxes including the sale, VAT, and income. Timely payment of these liabilities helps businesses to the statutory complaint.

ACCOUNTING & BOOK KEEPING COMPARED

While Bookkeeping is an activity of recording the financial transactions of the company in a systematic manner,  Accounting is an orderly process of recording and reporting the financial performance of an Organization over a period of time.

WOULD YOU LIKE TO KEEP A PROPER RECORD OF YOUR BUSINESS?

Kindly contact  our firm or team of experts  with any of the following contacts listed here below for issues relating to Bookkeeping  and Accounting, tax, Audit Engagement, and Accounting services, Investigation and other managerial services :

Email address:                          info@ogbefirm.com

Phone numbers:                        08065207253,  091435 8528

Or visit us at our head office: Suit 18, Block A, Ire-Akari Model Market,

                                                 Isolo, Lagos

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