The following elements make up the essential foundations of bookkeeping. Keep these business basics in mind when you set out to create a bookkeeping system:

  • Chart of Accounts: Lists all accounts in the books, and is the road map of a business's financial transactions

  • Sales Ledger: Lists all the customer accounts, showing sales invoices, credit notes and receipts for each customer.

  • Purchase Ledger: Is a list of all your supplier accounts, including purchase invoices, credit notes and payments made to suppliers.

  • Cash book: This is where you will record all the bank and cash payments and receipts for the business.

  • Nominal Ledger: The book that summarizes all of a business's account transactions