Bookkeeping is the recording of the money values of the function of a business. Bookkeeping grants the numbers from which accounts are prepared but is a different process, prior to accounting.

Predominantly, bookkeeping provides two kinds of information: (1) the current value, or equity, of a business and (2) changes in value—profit or loss—taking placement in the enterprise over a single period of time.

Management officials, investors, and credit grantors all demand such information: management to understand the upshots of operations, to control costs, to budget for the future, and to make financial policy decisions; investors in order to analyse the upshots of business operations and make decisions for buying, holding, and selling securities; and credit grantors so as to assess the financial statements of an entity in judging whether to allow a loan.

Pieces of financial and numerical record charts are found for just about every state with a commercial history. Records of commercial contracts have been discovered in the archaelogical digs of Babylon, and accounts for both farms and estates have been created in ancient Greece and Rome. The double-entry process of bookkeeping began with the development of the commercial republics of Italy, and manuals for bookkeeping were created in the 15th century in some Italian cities.

Within the late 18th and early 19th centuries, the Industrial Revolution provided a significant stimulus to accounting and bookkeeping.

The rise of manufacturing, trading, shipping, and subsidiary services made factual financial recordkeeping a paramount factor. The past of bookkeeping, in fact, closely resembles the history of commerce, industry, and government and, in some part, helped forming it. The global spread of industrial and commercial activity required more professional decision-making methodology, which then called for more sophistication in the selection, classification, and presentation of information, more so with the progression of computers. Taxation and government legislation became more significant and resulted in higher requirement for information; business firms had to provide information to go with their income tax, payroll tax, sales tax, and other tax reports. Governmental agencies and educational and other nonprofit institutions also grew, and the need for bookkeeping for their own operations increased.

While bookkeeping procedures can be extremely complex, all of it is based on two kinds of books used in the bookkeeping procedure—journals and ledgers. A journal has the daily transactions (sales, purchases, and such), and the ledger has the records of individual accounts. The daily records kept in the journals are written in the ledgers.

At the end of every month, as a general rule, an income statement and a balance sheet are made from the trial balance posted out of the ledger. The point of the income statement or profit-and-loss statement is to show an analysis of the changes that occurred in the enterprise equity resulting from the transactions of the period. The balance sheet displays the financial condition of the company at a particular day taken from assets, liabilities, and the ownership equity.

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