Bookkeeping is the charting of the money values of the operation of a business. Bookkeeping grants the numbers from which accounts are made but is a different process, prior to accounting.

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

Management officials, investors, and credit grantors all require this 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 assess the results of business operations and make decisions regarding buying, holding, and selling securities; and credit grantors to regard the financial statements of an entity in deciding whether to allow a loan.

Pieces of financial and numerical record charts can be found for just about every country with a commercial history. Records of commercial contracts were uncovered in the ruins of Babylon, and accounts for both farms and estates have been held in ancient Greece and Rome. The dual-entry style of bookkeeping began with the progression of the entrepeneurial republics of Italy, and manuals for bookkeeping were developed during the 15th century in several Italian cities.

During the late 18th and early 19th centuries, the Industrial Revolution granted a notable stimulus to accounting and bookkeeping.

The progression of manufacturing, trading, shipping, and subsidiary services made correct financial records a requirement. The ancestry of bookkeeping, in fact, reflects the past of commerce, industry, and government and, in part, assisted to form it. The worldwide movement of industrial and commercial activity called for greater professional decision-making methods, which itself called for higher sophistication in the selection, classification, and presentation of information, increasingly with the progression of computers. Taxation and government regulation became more important and resulted in increased demand for information; business entities had to have information available to support their income tax, payroll tax, sales tax, and other tax reports. Governmental agencies and educational and other nonprofit institutions also became sizeable, and the requirement for bookkeeping for their own operations went up.

Though bookkeeping processes can be rather multifaceted, all of it is based on two styles of books used in the bookkeeping process—journals and ledgers. A journal must have the daily transactions (sales, purchases, and so on), and the ledger must have the record of individual accounts. The daily records in the journals are put in the ledgers.

At the end of each month, generally speaking, an income statement and a balance sheet are created from the trial balance posted within the ledger. The point of the income statement or profit-and-loss statement is to present an analysis of any changes that happen in the business equity due to the operations of the period. The balance sheet shows the financial situation of the business at a particular date with regard to assets, liabilities, and the ownership equity.

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