Bookkeeping is the process of recording all financial transactions that are undertaken by organizations and individuals. It is regarded as an accounting aspect that has something to do with the mechanics of inputting financial transactions on journals and ledgers, posting entries on journals as well as performing trial balances. Keeping of books of accounts also form part of the bookkeeping function.

The person that does bookkeeping is called bookkeeper which is also sometimes known as accounting clerk. He is tasked to record the day-to-day transactions of a business enterprise. He is responsible to perform the writing up of daybooks which consist of sales, purchases, receipts and disbursements. He is responsible for posting the entries of transactions to the correct daybook, customer's ledger, supplier's ledger and general ledger.

Companies normally hire bookkeepers as employees. Bookkeepers are normally found in the accounting department. Other companies may decide to outsource their bookkeeping functions and would instead hire bookkeeping services of independent contractors.

The bookkeeping process involves certain steps. Firstly, the bookkeeper makes an analysis on the financial transactions for him to be able to assign the transactions into correct specific accounts.

Secondly, the bookkeeper writes journal entries. He may use either the single entry bookkeeping system or the double entry system depending on which is preferred by the management. Most businesses use double entry bookkeeping system which consists of debit and credit accounts while small businesses may opt to use single entry bookkeeping system which is a simple one.

The third step is to post entries on ledger accounts. Ledger is the principal book of recorded transactions. Bookkeeper may segregate the transactions into separate ledgers such as the posting of all sales transactions in sales ledger and purchasing transactions in the purchase ledger.

The posting entries in the ledger are significant in the creation of financial statements. But before the entries are summarized in the financial statements, the bookkeeper may have to make adjusting entries and closing entries on nominal accounts at the end of each accounting period. After this step, he can create a trial balance which leads him to the accounting functions of preparing income statement and balance sheet. An accountant normally does the accounting functions. In most cases, bookkeepers are also accountants and may qualify to perform accounting functions.

The process of recording transactions in journals and posting entries in the ledger is based in two fundamental principles. The first one is that every debit must have a corresponding equal credit. Secondly, all accounts must equal or balance. Any imbalances on the debit and credit may signify erroneous recording on the accounts.

Bookkeeping can be performed using pen or pencil. The traditional bookkeeping method is performed manually with the use of journal and ledgers. Nowadays, it is possible to record all financial transactions of an enterprise in electronic way.

The existence of accounting software may narrow the chances of more erroneous recording using the traditional method. It can improve the speed of performing bookkeeping works. There are software programs which can provide alert to bookkeepers in the event of unbalanced accounts.

Moreover, inputting of financial transactions can be made online. Online bookkeeping is an alternative to many businesses that permits their bookkeepers to perform the job remotely. It allows remote access to books of accounts. Updating the books can possibly be made in a remote manner. This technology is most employed by entities with mobile employees and centralized organizations with multiple offices.

Quickbooks and SQL Ledger are examples of online bookkeeping software.

Bookkeeping is very relevant to a business enterprise. Before the accounting function of preparing income statements and balance sheets, cost analysis and preparation of tax returns, the bookkeeping function should take place. It brings necessary support to the accounting functions.