Editing Bookkeeping (section)

==Process ==
The primary purpose of bookkeeping is to record the ''financial effects'' of transactions. An important difference between a manual and an electronic accounting system is the former's latency between the recording of a financial transaction and its posting in the relevant account. This delay, which is absent in electronic accounting systems due to nearly instantaneous posting to relevant accounts, is characteristic of manual systems, and gave rise to the primary books of accounts—cash book, purchase book, sales book, etc.—for immediately documenting a financial transaction.

In the normal course of business, a document is produced each time a transaction occurs. Sales and purchases usually have [[invoice]]s or [[receipt]]s. Historically, deposit slips were produced when lodgements (deposits) were made to a [[bank account]]; and checks (spelled "cheques" in the UK and several other countries) were written to pay money out of the account. Nowadays such transactions are mostly made electronically. Bookkeeping first involves recording the details of all of these ''[[source document]]s'' into multi-column ''journals'' (also known as ''books of first entry'' or ''daybooks''). For example, all credit sales are recorded in the sales journal; all cash payments are recorded in the cash payments journal. Each column in a journal normally corresponds to an account. In the [[single-entry accounting system|single entry system]], each transaction is recorded only once. Most individuals who balance their check-book each month are using such a system, and most personal-finance software follows this approach.

After a certain period, typically a month, each column in each [[Journal entry|journal]] is totalled to give a summary for that period. Using the rules of double-entry, these journal summaries are then transferred to their respective accounts in the [[ledger]], or ''account book''. For example, the entries in the Sales Journal are taken and a debit entry is made in each customer's account (showing that the customer now owes us money), and a credit entry might be made in the account for "Sale of class 2 widgets" (showing that this activity has generated revenue for us). This process of transferring summaries or individual transactions to the ledger is called  ''posting''. Once the posting process is complete, accounts kept using the "T" format (debits on the left side of the "T" and credits on the right side) undergo ''balancing'', which is simply a process to arrive at the balance of the account.

As a partial check that the posting process was done correctly, a working document called an ''unadjusted trial balance'' is created. In its simplest form, this is a three-column list. Column One contains the names of those accounts in the [[ledger]] which have a non-zero balance. If an account has a ''debit'' balance, the balance amount is copied into Column Two (the ''debit column''); if an account has a ''credit'' balance, the amount is copied into Column Three (the ''credit column''). The debit column is then totalled, and then the credit column is totalled. The two totals must agree—which is not by chance—because under the double-entry rules, whenever there is a posting, the debits of the posting equal the credits of the posting. If the two totals do not agree, an error has been made, either in the journals or during the posting process. The error must be located and rectified, and the totals of the debit column and the credit column recalculated to check for agreement before any further processing can take place.

Once the accounts balance, the accountant makes a number of adjustments and changes the balance amounts of some of the accounts. These adjustments must still obey the double-entry rule: for example, the ''[[inventory]]'' account and asset account might be changed to bring them into line with the actual numbers counted during a [[Stock-taking|stocktake]]. At the same time, the ''expense'' account associated with use of inventory is adjusted by an equal and opposite amount. Other adjustments such as posting [[depreciation]] and prepayments are also done at this time. This results in a listing called the ''adjusted trial balance''. It is the accounts in this list, and their corresponding debit or credit balances, that are used to prepare the financial statements.

Finally [[financial statement]]s are drawn from the trial balance, which may include:
* the [[income statement]], also known as the ''statement of financial results'', ''profit and loss account'', or ''P&L''
* the [[balance sheet]], also known as the ''statement of financial position''
* the [[cash flow statement]]
* the [[statement of changes in equity]], also known as the ''statement of total recognised gains and losses''

===Single-entry system===
{{main|single-entry bookkeeping}}
<!-- NOTE TO EDITORS: Please remember that this is a summary of this topic covered in the article re single-entry bookkeeping. -->

The primary bookkeeping record in single-entry bookkeeping is the ''cash book'', which is similar to a checking account register (in UK: cheque account, current account), except all entries are allocated among several categories of income and expense accounts. Separate account records are maintained for petty cash, [[accounts payable]] and [[accounts receivable]], and other relevant transactions such as [[inventory]] and travel expenses. To save time and avoid the errors of manual calculations, single-entry bookkeeping can be done today with do-it-yourself bookkeeping software.

===Double-entry system===
{{main|double-entry bookkeeping}}
<!-- NOTE TO EDITORS: Please remember that this is a summary of the topic covered in the article on double-entry bookkeeping. -->

A ''double-entry bookkeeping system'' is a set of rules for recording financial information in a [[financial accounting]] system in which every transaction or event changes at least two different ledger accounts.