Why learn book-keeping – it is a question I often get asked by my students. It is a good question and it deserves a considered reply.
But before answering the question why learn book=keeping it is important to explain ‘what is bookkeeping’. Bookkeeping is the recording of a business’s commercial transactions. Examples of such transactions are purchases, sales and expenses which must be recorded in the business’s accounting records. Once the transactions have been recorded, they can be summarised at the end of the accounting period to produce the Income Statement and Balance Sheet.
From this definition we can see that bookkeeping is at the heart of business it is often said to be the language of business. If you want to talk business then you have to know the meaning of net profit, gross profit, receivables and payables.
If you want to really understand the financial performance and financial position of the business then a knowledge of double entry bookkeeping is very useful.
The reason why people learn bookkeeping are many and varied. Maybe you want to pursue a career as a bookkeeper or an accountant and obviously you will have to study double entry bookkeeping to a level that many would not wish to do so.
You may run your own business and feel that a knowledge of bookkeeping would give you a greater understanding of the business, and perhaps you are becoming more than a little concerned about the rising costs of your accountant’s fee. Even if you can’t do without an accountant perhaps you could reduce his fees by doing some of the bookkeeping work yourself.
Also book-keeping does lend itself to computerisation, essentially you are inputting data of financial transactions into the accounting software, and the computer then analyses it and presents it in useful forms such as the Income Statement and the Balance Sheet. Providing the data is entered correctly then computer software is fine, the problem is when things go wrong. For example if capital expenditure is inputted as revenue expenditure. A good working knowledge of bookkeeping would help you to correct and reverse this error – so that you can get the best out of your computer package.
Lastly many courses at college or universities run courses on finance and often bookkeeping is a module for which they have to study. Many finance students will go on to be shareholders in companies, or become government or bank officials and their knowledge of double entry will always come in useful.
About the author of this article.
Michael Hughes is the founder and creator of this site on Free Book-keeping Courses Online UK. He is known for his ability to explain book-keeping and accounting in a clear, concise and thorough manner. He has a BA (Hons) in Accounting and Finance and a Teaching Certificate from the University of Manchester.His background includes:-15 years as founder and managing partner of a UK accountancy distance learning company.-11 years as a college lecturer in accountancy.-5 years in HMRC-4 years in public accountancy practice.
His interest and passion includes communicating accounting and creating free book-keeping courses and imparting his knowledge through the Internet.
Michael lives in Lincolnshire in the UK and he can be contacted by email on email@example.com
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