What is bookkeeping?
Bookkeeping, the recording of the money values of the transactions of a business. Bookkeeping provides the information from which accounts are prepared but is a distinct process, preliminary to accounting.
Why do you need it?
Essentially, bookkeeping provides two kinds of information: (1) the current value, or equity, of an enterprise and (2) the change in value—profit or loss—taking place in the enterprise over a given period of time. Management officials, investors, and credit grantors all require such information: management in order to interpret the results of operations, to control costs, to budget for the future, and to make financial policy decisions; investors in order to interpret the results of business operations and make decisions about buying, holding, and selling securities; and credit grantors in order to analyze the financial statements of an enterprise in deciding whether to grant a loan.