No company or institution working on commercial, service, or industrial projects is without its own accounting books, as they are the basic reference for the company’s financial transactions. They also contribute to decision-making in institutions and are considered approved legal documents to be taken in the event of judicial disputes. Why did these books gain such importance? Why are their types different and not considered uniform in all institutions? This is what we explain in our article, explaining the most important types of accounting books and giving you a simple overview of how to prepare these books on the Qoyod accounting system.
What are accounting books?
Accounting books are the main tool that the accountant relies on to record all of the company’s accounting and financial transactions at the time they occur, accompanied by supporting documents that help monitor all the details of the entries that are made during the company’s financial day to avoid the occurrence of errors that may cause the loss of the rights of the company, customers, or employees. It also confirms and supports what the company announces regarding the development of the business or the presence of obstacles in it. A single notebook is not reliable for recording enterprise transactions; rather, there are different types of notebooks designated for each type of transaction.
Accounting books are used for relatively long periods and are recorded day after day so that the company’s management can determine the suitability or failure of the strategies adopted by them. These books may also serve institutions or individuals to follow up on their business and investments because they are a realistic source for collecting data and information that are included in financial reports that help in analyzing performance and making appropriate decisions for the company.
Types of accounting books
Companies have multiple financial obligations and various sources of income, in addition to many projects whose expenses and revenues must be tracked. Thanks to this, there are different types of accounting books in any company or commercial, service, or industrial institution, and these books include the following:
Ledger
It is a basic financial record in which all daily book transactions are recorded. It must be present in all types of institutions, and it must also be present with businessmen to follow up on their projects and investments. It contains accounts such as assets, liabilities, revenues, expenses, and property rights, and they contain numbers that organize accounting operations according to their types. It also includes all of the company’s financial transactions, so it is considered necessary in any facility. It is relied upon to prepare the general budget for institutions and monitor any financial data required by the company. Other subsidiary books branch out from it, the details of which are as follows:
General Ledger
It is the book in which the company’s financial transactions are recorded in brief, in preparation for including them in the appropriate daily books in detail. It includes all the transactions of the fiscal year and is opened at its beginning and closed at its end, and the following descends from it:
Subsidiary ledger of the general ledger
This record includes detailed financial and accounting data for the assets and short-term liabilities incurred by the company, and it also includes accounts for the fixed assets and long-term liabilities in which the organization deals.
Cash Receipt Journal
It is concerned with collecting data that reflects the cash sales transactions that take place in the company and does not include credit sales transactions. It also includes details of the debts and receivables that are supplied to the company.
Cash Disbursement Journal
It is the record in which any financial transactions disbursed from the company’s treasury during the day are recorded. It is a record for expenditures only, whether they are made to purchase the company’s needs or to pay its debts.
Creditor ledger
It is used to record purchases made using payment credit plans or long-term plans to prove their dates and when the funds are due.
Debtor ledger
It is the book in which transactions made on credit are recorded, whether they are sales to individuals or companies, and their details are explained in it.
Assistant Ledger
Another ledger record is one in which financial and accounting transactions are recorded in detail. It includes fixed asset transactions and customer accounts, in addition to clear details of all transactions that are recorded in the general ledger. Some other accounting books fall under it, and they are as follows:
Fixed Assets Subsidiary Ledger
It is the record through which the values of the assets owned by the company are determined, and thus it is relied upon to record the details of the consumption of those assets, the cost of renewing them or the expenses incurred on them, and their book value.
Accounts Receivable, Subsidiary Ledger
A detailed notebook for everything related to customers, including financial and credit transactions, discounts, payments, etc. What distinguishes this notebook is that each customer has his own balance, separate from the company’s balances.
Accounts Payable Subsidiary Ledger
In this book, all buying and selling transactions related to the merchants who are purchased from dealt with, and relied upon to provide the company’s needs are followed up.
Cost Subsidiary Ledger
This record tracks the company’s production costs and also pays for the expenses incurred by the company to provide operational and raw materials. Its aim is to know the cost incurred by the company to complete the production process of a product or service it provides, which helps it decide which goods can reduce its expenses or increase its sales to increase profits.
Inventory Subsidiary Ledger
It is concerned with monitoring the raw materials and tools that are relied upon to provide the services that the company works to provide while determining their quantities and the adequacy of their stock so that the company can monitor their availability to prevent their depletion and conduct production as it should.
Daily Books
These are the books in which data is recorded day by day, whether they are sales or purchases, expenses or revenues, and then they are transferred to the ledger, which identifies the expenses and revenues received by the company and also identifies the goods that were sold and the raw materials, tools, etc. that were purchased. It is useful in following up on the implementation of the company’s plans and analyzing its performance in preserving capital and effective marketing.
Purchase Day Book
A record in which data on purchases that were not made in cash is kept, along with invoices proving the purchases and the entitlement of money to the company for the goods or services it provided, with clarification of the due dates.
Sales Day Book
Another type of daily record is based on recording sales made on credit rather than in cash, and all transactions recorded with invoices are recorded immediately upon completion.
Return Inward Book
In it, the details of the goods that are returned are recorded due to damage, error, etc., and when their invoices are received, returned, and recorded in the book, the customer who returned them receives a credit note.
Inventory Book
A record used in accounting to follow up on operations related to the assets owned by the company, as well as its stock of goods, raw materials, and tools, specifying the quantity and cost with the current value and date of receipt, to determine the extent of selling efficiency and the success of the organization’s sales and marketing plans.
Government accounting books
The general accounting system in the Kingdom of Saudi Arabia contains books known as “government books,” which are records used to record values and financial data as usual. Some of them are even the same as those used in non-governmental institutions, such as the journals and ledgers. But it also contains more detailed records, including:
Fixed assets book
Everything that is considered a fixed asset of an institution or government is recorded in it, such as equipment used for production, buildings, etc., and it is important for asset management, which makes it an essential tool for preserving the capital of institutions.
Final accounts book
It is a special record of the accounts made at the end of the financial year, and it serves as a record of the data used in preparing the final reports that give a comprehensive view of the performance provided by the institution during the ending year.
Revenue book
This record is concerned with monitoring all revenues received by the institution or government, regardless of their different sources, and helps to understand the liquidity coming to the institution and identify and study its sources to enable management to make the right decisions.
Expense book
Record monitors all financial transactions issued by the government or institution in the form of expenditures, and it is necessary to record all expenditure channels in it to ensure that the government’s budget is not exceeded and that capital is not affected or depleted.
Financial control book
This book regulates financial transactions within certain rules and limits to ensure full compliance with established financial plans, in addition to being an official reference that proves the accuracy of financial transactions and the method of their implementation.
Liabilities book
It is concerned with the finances that the institution or government must pay, including debts, and by recording them in it with their due dates, this book ensures that debts are paid on their due dates without delay.
Budget notebook
Any details related to the budgets that the institution sets to conduct its work are recorded in this book, and the necessary reviews are recorded. This book is a tool that guarantees the transparency of the budgets set, and it is also considered an approved reference when subject to legal questioning or requesting supporting documents.
The importance of accounting books in commercial institutions
After we mentioned a number of necessary accounting books in various institutions, we must know why the presence of accounting books in institutions and among investors is important. We can say that the importance of these notebooks is due to the following reasons:
- Accounting books contribute to organizing business and financial matters in institutions and recording every financial transaction with its dates and value as they are.
- This type of record helps preserve the rights of all parties involved in working for the company, whether clients, employees, or management.
- Organizations are able to achieve success by paying attention to accounting books because they provide the company with a comprehensive view of the flow of business, which contributes to avoiding errors and exploiting opportunities.
- These records are documents that ensure trust between the institution and society, as well as transparency between them. They also contribute to developing reports that provide information that can be relied upon in the companies’ future plans.
- Records enable you to know the level of progress the company has made or determine whether it has reached the break-even point or even the losses that may occur if the business continues in the same way. Therefore, these analyses can be used to enhance the company’s chances of success and ward off the risks of failure.
- The books indicate the level of financial security in companies, and they also reveal any manipulation of accounts or fraud, so they help maintain the organization’s stability and financial security.
How to use accounting books effectively
In order to be able to ensure that accounting books work correctly, that values are recorded in them easily and conveniently, and that data is extracted from them, you must do the following:
- Determine an accounting structure appropriate to the nature of the organization’s work and size before starting to prepare its records.
- Use the Qoyod accounting system to be able to record data on time and easily.
- Document the details of the transactions, and the system used to be able to save the information in a system and retrieve it when needed.
- Check your books regularly to make sure that the data recorded in them is balanced.
- Take advantage of Qoyod’s ability to analyze data to enable you to make the best decisions for your organization.
How to use accounting books in the Qoyod accounting system
The Qoyod system offers you the easiest possible way to record your company’s accounting entries through it. Below, we present to you the method of recording data in the ledger, the book of entries, and the summary of sales and purchases.
How to record data in the ledger
This register is concerned with monitoring the movement of accounts and recording their values daily. Each account has some pages appropriate to its activity, and data is recorded in them, provided that the debit values are on their own side and the credit values are on the side designated for them. Here, the account balance is the final total of the amounts added to the account.
Therefore, when you click on “View net movement for the fiscal year” and choose the date for the closing balance, the required details are displayed.
Record data in the entries book.
You must begin recording all entries made in the system immediately, without delay or postponement, using the double entry method. Therefore, you must choose Reports from the side menu, then choose the book of entries to begin recording the organization’s financial values.
Preparing a summary report for sales and purchases
This report is used to monitor the average prices and quantities required and to follow up on customer feedback after the sale. You can activate it by clicking on the reports, then choosing a summary of sales and purchases, and then specifying the required period to begin recording the data.
Conclusion
Accounting books are extremely important tools in organizations that maintain their stability and secure them against risks. To enable you to record all of your company’s transactions in the cloud, choose the Qoyod accounting system, which enables you to get the benefits you desire and more. You can try the Qoyod system for 14 days for free to get to know it better. This is without having to enter your credit card information.
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