What Are the 8 Most Basic Types of Bookkeeping?

 If you have a business or other company you need to keep track of the money that goes in and out of your account on a regular basis, but aren’t sure how to categorize the various forms of bookkeeping, this article will help you understand the 8 most basic types of bookkeeping. 

There are many different types of bookkeeping methods, some more complicated than others. When you’re trying to understand what bookkeeping actually is, it can be helpful to break it down into the most basic of categories. 

In addition, the article will give you an overview of what each type means so that you can better manage your business finances and take advantage of these tools as part of your business strategy. There are different types of bookkeeping services that may be used by businesses and organizations to track their income and expenses.

1) Cash book

A cash book is used to record all receipts and payments related to cash, such as earnings and expenses. For example, you might create a $300 expense for food to be deducted from your checkbook balance at the end of every month. A cash book is just like a checkbook except that it shows transactions on an accrual basis rather than on a cash basis. Cash books provide useful information for reviewing your balance sheet, which we'll cover in more detail below.

2) Debtors book

The debtors book is also known as a ledger, and it contains records of all people who owe your business money. A debtors book should include information about how much they owe, when their payments are due, what kind of payment they make (credit card or check), and what actions have been taken to ensure that payments are received. This information is typically recorded by month. Debtors books are part of your general ledger, which you can think of as a record-keeper for all accounting activities within your company.

3) Profit & Loss Account

This is a good account to get familiar with. It'll give you a very basic snapshot of your business's financial health, and can also help you set up a budget for your business. When it comes to accounting, balance sheets and cash flow statements are more important than profit & loss accounts, but many small businesses start with just P&Ls before moving on to other types of bookkeeping. Profit & loss accounts use an income statement format that breaks down where the money came from and where it went.

4) Trial Balance

In a nutshell, a trial balance is an end-of-month snapshot that lists all of your debits and credits for each account. A tally or checklist of sorts, a trial balance allows you to make sure everything balances out. For example, if you have a credit in one account and a debit in another, your bookkeeping will alert you via a red flag – otherwise known as an audit trail. A trial balance is used for many things – from balancing your books at month-end to starting tax preparation work during tax season. All small businesses with inventory need to know what their closing stock values are as well as have an accurate value for their accounts receivable.

5) Credit memo book

Whenever a vendor provides a refund, you need to keep a record of it. You can choose to do that in your regular ledger or you can use a separate book called a credit memo book. Credit memo books are more convenient since they're usually smaller and designed specifically for recording refunds. Many accounting programs will even let you create an automatic link between your credit memo book and your general ledger so that whenever you record a refund in one place, it gets recorded in another place automatically.

6) Sales ledger

The sales ledger is sometimes also called a cash book. It’s really just an ongoing record of all your income. If you have multiple streams of income, it’s useful to have separate ledgers for each stream so that you can track exactly where your money is coming from and going to. This will help you determine which type of business model works best for you—and might even help if it turns out that no business model fits! If that happens, at least you’ll know where all your money comes from, which might inspire new ideas on how to get more money in your pocket. Or not! As long as there are good people in need of your product or service, someone can make a living providing them with those things.

7) Bank account register

The most basic type of bookkeeping is using a bank account register. This is simply a running list or journal that tracks your transactions, including income and payments. It’s not exactly high-tech, but it does get you out in front of all your money—where you should be. By looking at your register every day, you’ll quickly become aware of any problems or questions about what’s going on with your finances. Plus, tracking all these things will help keep you financially accountable by showing exactly where you spend and save each month—and how much interest (or loss) your deposits are making for you in savings accounts or investments.

8) Purchase ledger

A purchase ledger is a book, usually used by companies and organizations to keep track of their inventory. Purchase ledgers usually list all purchases for a specific time period and include who purchased or received what, when they purchased it and how much they paid for it. Purchase ledgers are most commonly used in business accounting departments. They're often combined with accounts payable ledgers, which show all debts that need to be paid immediately; accounts receivable ledgers, which record debts that clients owe to a company; accounts receivable reports, which summarize data from these books into usable form; and accounts payable reports, which summarize data from these books into usable form.

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