Bookkeeping is the process of systematically recording, organizing, and maintaining a company’s financial transactions on a daily basis. It is a fundamental aspect of accounting that ensures all financial activities—such as sales, purchases, payments, and receipts—are accurately documented and classified in the appropriate accounts.

The primary goal of bookkeeping is to create a reliable financial record that reflects the financial health and activities of a business. These records serve as the foundation for preparing financial statements, including the income statement, balance sheet, and cash flow statement.

There are two main methods of bookkeeping: single-entry and double-entry. Single-entry bookkeeping is simpler and typically used by small businesses, recording each transaction once. Double-entry bookkeeping is more comprehensive and accurate, recording each transaction in two accounts—one as a debit and the other as a credit—to maintain the balance of the accounting equation.

Bookkeeping tasks often include posting journal entries, reconciling bank statements, managing accounts payable and receivable, and tracking payroll and tax obligations. Modern bookkeeping is commonly performed using accounting software, which improves accuracy and efficiency.

In essence, bookkeeping is essential for financial management, regulatory compliance, and informed decision-making, making it a critical function for businesses of all sizes.