Bookkeepers come in many shapes and forms. They can work for themselves, going into other organisations and completing paperwork for financial transactions. Alternatively, they can be employed by a single organisation, and could be part of a larger finance function.
If you’re looking to become a bookkeeper, there are a number of things you will need to be very familiar with. In order to develop an advanced understanding of both theory and practice, it’s a good idea to gain a recognised bookkeeping qualification like AAT.
So, what exactly does a bookkeeper need to know?
What ledgers are
There are three specific ledgers: the general ledger, the purchase ledger, and the sales ledger.
The general ledger is where double entry bookkeeping is carried out. All analysis of the accounts takes place in here. The purchase ledger is where all of the suppliers’ information is kept. In the sales ledger, all customer information can be found.
As a bookkeeper, you’ll need to know how to keep these ledgers up-to-date, whether working with computerised or manual ledgers.
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What counts as a valid and relevant transaction
Transactions to be included in the accounts must be related to the business in question, and they must also sit within the relevant time frame.
A bookkeeper needs to be able to spot information that does not need to be processed in the accounts.
How to complete double entry bookkeeping
Double entry bookkeeping is all about debits and credits. Bookkeepers must know which accounts need to be debited, which need to be credited, and when.
As a bookkeeper, you will be processing the double entry on a day to day basis, which makes this is a fundamental part of the role.
Credit control and accounts payable
Depending on their particular role, bookkeepers may also be required to know about credit control and accounts payable.
The credit control process is all about getting money in from customers on time to avoid cash flow problems and possible charges. The accounts payable process concerns paying suppliers on time when invoices are authorised.
Some bookkeepers will be personally responsible for credit control and accounts payable processes. Others will need to work alongside staff whose roles include these processes, and so should have some level of awareness of them.
Aside from both theoretical and practical knowledge of specific processes, it is important for bookkeepers to be highly accurate in their work. If, for any reason, you are unsure as a bookkeeper how to deal with a particular transaction, you must ask for help.
In terms of bookkeeping ethics, you must follow the principle of professional competence of due care. This means you must be competent in the tasks you undertake.
To find out how the AAT qualification can ensure you have the required competence for bookkeeping tasks, get in touch below.