Bookkeeping is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions. The transactions are usually recorded in a accounting system.
There are three main types of bookkeeping:
1) Single-entry bookkeeping,
2) Double-entry bookkeeping, and
3) Computerized accounting.
Single-entry bookkeeping is the simplest form of bookkeeping. In single-entry bookkeeping, each transaction is only recorded once. This method is often used by small businesses or individuals because it is less time-consuming and requires less record keeping than double-entry bookkeeping.
Double-entry bookkeeping is a more complex form of bookkeeping that records each transaction in two accounts. This method is used to record how each transaction affects both sides of the accounting equation: assets, liabilities, and equity.
Computerized accounting is a system that uses accounting software to automate the recording, classification, and summarization of financial transactions. This method is used by businesses of all sizes because it is efficient and accurate.