Recording daily financial transactions
Recording daily financial transactions
A Bookkeeper is responsible for recording and maintaining a business’ financial transactions, such as purchases, expenses, sales revenue, invoices, and payments. The Bookkeeper will record financial data into general ledgers, which are used to produce the balance sheet and income statement. The bookkeeper is generally responsible for overseeing the first six steps of the Accounting Cycle, while the last two are typically taken care of by an accountant. While there is a general overlap between the two professions, there are a few distinctions that are later discussed in this article.
Being consistent, accurate, and minimizing errors are key characteristics that employers are seeking for this position. It is indispensable to have a knowledge of accounting and to understand how to use accounting software systems. In larger businesses, a bookkeeper is responsible for overseeing and reconciling hundreds of financial transactions. This is typically done with the assistance of various software systems, and for this reason, technology literacy is incredibly valuable for the profession. A few other relevant skills and job duties would include the following:
A bookkeeper can expect to earn a salary in the range of $30,000-$60,000 a year in the US. However, compensation will widely vary depending on the employer, location, and candidate experience. Bigger companies tend to offer better compensation for bookkeepers; this is largely due to the increased volume of transactions and data. A multinational corporation performs hundreds of transactions a second, while a small business might perform less than a hundred in a day.
Usually, the entry-level salary for both bookkeepers and accountants tends to be similar; however, the earning potential of an accountant tends to increase as their career progress. It is not uncommon for an experienced bookkeeper to make a career transition into accounting or another profession. As bookkeepers work closely with raw data, they tend to develop a good understanding of how a business works.
A bookkeeper is responsible for recording transactions into the system, which is part of the wider and more general practice of accounting. Generally, a bookkeeper will provide an accountant with the trial balance, which is a consolidation of all the general ledger accounts, which the accountant uses to derive the Balance Sheet, Income Statement, and later the Statement of Cash Flows.
One way to think about it is that bookkeepers lay the groundwork for accountants to analyze and prepare financial statements. Bookkeepers use software to assist with the recording of transactions and generally use built-in data processing tools to help in the preparation of the financial statements and preset transaction classification to improve the transaction recording efficiency.
Bookkeeping is the recording of financial events that take place in a company. Any process of recording financial data is considered bookkeeping and is the first step of data entry into the accounting system. Standard methods of bookkeeping are the double-entry bookkeeping system and the single-entry bookkeeping system. Good bookkeeping practices are essential for a business to succeed, especially when it comes to the tax-paying season.
Bookkeepers are essential for any business. A bookkeeper provides a critical role in the data collection and data input of a business’ accounting cycle. When there is a proper system in place that avoids problems such as skimming fraud, the recorded financial data can provide valuable, actionable insight.
If you want to learn more about relevant career paths, check out the Corporate Finance Institute Career Map. Here are some resources and courses that can help you advance your Career:
Advance your career in investment banking, private equity, FP&A, treasury, corporate development and other areas of corporate finance.
Get certified as a financial analyst with CFI’s FMVA Program.