What is the primary purpose of bookkeeping?

The primary purpose of bookkeeping is to record transactions and maintain financial records. Bookkeeping involves the systematic recording of daily financial transactions, such as sales, purchases, receipts, and payments. This function ensures that all financial activity is accurately captured and organized, providing a detailed and clear picture of a business's financial position over time.

By maintaining precise financial records, bookkeeping lays the groundwork for further financial tasks, such as preparing financial statements. Accurate and organized records enable businesses to track their income and expenses, which is essential for monitoring profitability, managing budgets, and making informed financial decisions. Bookkeeping also ensures that a business's financial records are complete and up to date, which is crucial for compliance purposes, although that is a secondary function. Overall, effective bookkeeping provides the foundation for financial accountability, transparency, and operational efficiency.