Bookkeeping Tutorial 1: WHAT IS BOOKKEEPING?

This video marks the first step in a series of topics about bookkeeping, providing a background for aspiring CPAs and those managing their businesses. The host, Kuya Sherwin, introduces himself and expresses his enthusiasm to teach.

The episode will cover three main objectives: understanding the definition of bookkeeping, classifying and comparing bookkeeping with accounting, and learning about the history of bookkeeping. The host emphasizes simplifying these concepts for better understanding.

Bookkeeping is defined as the process of tracking every financial transaction made by a business firm. Examples include listing daily expenses to save money and documenting transactions with receipts, invoices, or purchase orders. These records can be kept manually in a journal or using spreadsheet programs like Excel.

Bookkeepers can use either single-entry or double-entry bookkeeping, with double-entry being more commonly used today. Essential skills for bookkeepers include understanding the firm's chart of accounts and knowing how to use debits and credits to balance the books, which will be discussed in future episodes.

Bookkeeping is a part of accounting, with bookkeepers recording initial financial information, and accountants building upon this data for further analysis. Accounting involves recording, classifying, summarizing, interpreting, and reporting financial information, whereas bookkeeping primarily focuses on the initial recording aspect.

Bookkeeping is the first step in the accounting process, focusing on keeping accurate and complete records of financial transactions. Accountants, on the other hand, apply deeper analysis to these records to understand the overall financial picture of a business. Bookkeepers deal with specific, detailed records, while accountants look at the broader financial landscape.

The word 'bookkeeping' is unique for its consecutive double 'o,' 'k,' and 'e.' Historically, bookkeeping is not a recent practice, dating back to 6000 BC. Ancient civilizations like Babylon, Greek Kingdoms, and the Roman Empire had forms of financial and numerical records, indicating the long-standing nature of this practice.

Luca Pacioli is recognized as the Father of Accounting and Bookkeeping, credited with the formalization of these practices. His contributions laid the groundwork for modern financial record-keeping.

Before computers, bookkeeping involved handwritten spreadsheets, often large multi-column worksheets. Humans performed all arithmetic calculations manually, and paper ledgers required meticulous maintenance and careful storage in filing cabinets, emphasizing the need for accuracy and care.

With the advent of computers, bookkeeping became easier, allowing information to be typed into applications. Technological innovations, including sophisticated bookkeeping software and cloud bookkeeping, have increased efficiency and simplified complex tasks. Firms like PwC and SGV lead in adopting these technologies.

Accountants and bookkeepers must adhere to protocols and guidelines such as the Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS). These standards dictate how financial records are made and analyzed, ensuring consistency and accuracy in financial reporting.