Page 11 - Book-keeping for Secondary Schools Student’s Book Form One

Introduction to Book-Keeping

manner. Such recording includes proper activities. Book-keeping provides clear
classification according to the nature of and organised records of business financial
the transaction. The end result of Book- transactions, including sales, purchases,
keeping is to have net figures or balances consumption, payments and receipts.
in the ledger accounts. This will help The specific purposes of Book-keeping
to determine a profit or a loss and the include:
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financial position of the business. Book- (a) Financial records: Book-keeping
keeping also helps in the management ensures all financial records are properly
of credit dealings, proper control of the documented and easily accessible when
business and appropriate computation needed. It provides a comprehensive
of taxes. Hence, Book-keeping is the record of financial transactions, which
systematic recording, organising and helps in maintaining a clear and
tracking of financial transactions and accurate account of the enterprise’s
activities within a business.
financial activities.
Activity 1.1 (b) Compliance and legal requirements:

Visit any nearby food vendors or mobile Book-keeping plays a crucial role
money service shops and investigate various in fulfilling legal and regulatory
activities, involving keeping financial obligations. Organised and appropriate
records. Thereafter, read textbooks or financial records are necessary for
online reliable sources. Compare what you preparing tax returns and, meeting
have seen and read, then write down your financial reporting requirements.
understanding about the concept of Book-
keeping in your own words. (c) Financial management: Book-keeping
provides information for effective
Scope of Book-keeping financial management. It enables
The process of Book-keeping covers the businesses to track expenses, monitor
recording, classification, organisation cash flow, and evaluate financial
and maintenance of records of financial resources. By having up-to-date
transactions. It plays central role in financial records, an enterprise can
providing accurate financial information make informed decisions regarding
for decision making, legal and regulatory investment, budgeting and resource
compliance and financial analysis within allocation.
a business. (d) Facilitating business decision making:

Purpose of Book-keeping Book-keeping provides insights into
The purpose of Book-keeping is to enable revenue generation, cost management,
business to record and track the financial and profitability. The information helps
transactions of an enterprise or business in making sound business decisions.

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