Page 1 Chapter 1

Chapter 1

Accounting Roles and Transactions

In this chapter we will be looking at the differing roles within an accounting
system as well as the different organisations themselves. We will also look at the
different transactions which may take place and the ways businesses set up their
accounting systems.

B
efore we look at the mechanics of recording transactions we need to have a basic
understanding of the different roles within an accounting system as well as the different
types of business.

Bookkeeper

A bookkeeper is someone who records all the financial transactions of a business. Each type
of transaction is stored in a different file called a book, hence the name bookkeeper. The
most important actions of any business is buying and selling. The bookkeeper will record the
details of all day to day sales and purchases in day books. They are called day books because
daily transactions are recorded here. There will be a day book for sales and another for
purchases. Obviously sales and purchases will involve the transfer of money, so the
bookkeeper will also record the movement in and out of the business in a cash book. All
books which record these transactions as they happen are called books of prime entry. In
this case ‘prime’ means ‘first’ so these books are where the transactions are first recorded.

The bookkeeper is unlikely to be present at every transaction, so he or she will record
transactions in the books of prime entry from prime documents. Typically a prime
document is a receipt or an invoice, although we shall see later that other documents may
fall into this category.

Accountant

An accountant is someone who deals with the presentation
and interpretation of the figures. You will see later that there
are rules and regulations covering the presentation of
financial information. Financial information may include a
statement of profit or loss (also known as an income
statement or a statement of revenue and expense). A
statement of profit or loss (or SPL) shows a business’s
financial performance.

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