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Recording of the money values of business transactions. Bookkeeping provides the information from which accounts are prepared but is distinct from accounting. Bookkeeping offers information on both the current value, or equity, of an enterprise and on its change in value (due to profit or loss) over a given time period. Managers require such information to examine the results of operations and budget for the future; investors need it to make decisions about buying or selling securities; and credit grantors use it to determine whether to grant a loan. Financial records were kept in Babylon and in ancient Greece and Rome. The double-entry method of bookkeeping began with the development of the Italian commercial republics of the 15th century. The Industrial Revolution stimulated the spread of bookkeeping, and 20th-century taxation and government regulations made it a necessity. Two types of records continue to be used in bookkeepingjournals and ledgers. They can be recorded by hand or entered into a computer. The journal contains daily transactions (sales, purchases, etc.), while the ledger contains the record of individual accounts. Each month an income statement and a balance sheet are posted in the ledger.
This entry comes from Encyclopædia Britannica Concise. For the full entry on bookkeeping, visit Britannica.com.