Bookkeeping is an essential management tool, a requisite for good management. Bookkeeping consists mainly of establishing accounts from the entries of the enterprise's various operations. First, each operation is recorded daily in a journal. All these accounts form the account book. The promoters usually bring them to life by providing the capital.
Liabilities are the initial capital expenditure plus debts.
This is a table showing the type and amount of receipts and expenditure, and how the enterprise's stock has varied over one financial year. The operating account is said to be estimated when it is established prior to the start-up of the proposed operation. It estimates the various receipts and expenditure and shows the balance. The actual operating account is established at the end of the financial year and based on real receipts and expenditure. They are also called the proceeds.