Page 12 - Book-keeping for Secondary Schools Student’s Book Form One
P. 12
Book-Keeping for Secondary Schools
Management with accurate financial each of its creditors. Such records can
data can analyse different aspects systematically be kept following Book-
of the business, identify areas for keeping principles.
improvement, and make strategic
decisions to drive business growth. Debtor: This is a customer who has
bought goods on credit from business
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Importance of Book-keeping and promises to pay at a later date.
Book-keeping is important to business
owners and other parties outside the Creditor: This is a supplier who sold
enterprise in the following ways: goods or provided service on credit
to the business for payment to be
Determination of profits or losses made at a later date.
Book-keeping helps a business to
determine whether it is making a profit
or a loss. This is possible because Control of business
Book-keeping helps the enterprise to
keep complete, accurate and up-to-date To have an effective control of a business,
financial records that are used in preparing the owner of the business needs to keep
financial statements. Take an example proper records of his or her financial
of Mrs Chaza on page 2 Book-keeping matters. These records, in the long run,
assists the business to calculate profits or help the owner to decide on matters such
losses made for any period from the food as expansion or reduction of the business.
vending business. If Mrs Chaza sells breakfast, lunch
and dinner; appropriate record keeping
Knowledge of credit transactions may assist in deciding on the extent of
Many businesses are conducted on both efforts to dedicate to each of the menus.
cash and credit basis. For example, Mrs Additionally, in case the food is sold from
Chaza, would sell most of its food for more than one location or centre; Book-
cash, but she would occasionally sell to keeping may suggest whether the volume
some customers on credit. Similarly, it in one or another centre may need to be
is possible that Mrs Chaza buys some expanded or reduced according to the
of its raw foods on credit from the sales records. Book-keeping can also
market. In practice, many businesses help the proprietor to see whether there
have a significant volume of transactions are possible incidences where money,
conducted on credit. Book-keeping helps foodstuff or materials have been stolen or
the enterprises to maintain appropriate misused. This can be useful in making a
records of their credit transactions and decision on the corrective measures to be
know the amount due from each of taken where necessary.
its debtors and the amount owing to
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Student’s Book Form One
Book Keeping Form 1 New 2024 FINAL.indd 4 18/10/2024 10:14
