Bookkeeping records all movements in a company's accounts and is a vital component in the life of a company. Here's how it works.
According to the law, all companies must engage in financial accounting. Keeping auxiliary accounts may be useful, but in the end, it depends on the size of the company, the number of supporting documents and the company's needs. Auxiliary accounting refers to the management of several statements, in a different accounting cycle. Examples: debtors/creditors accounting, payroll accounting, investments accounting, securities accounting and real estate accounting.
In debtors/creditors accounting, customers and suppliers all have an account. All movements are accounted for (invoices, payments). The total is then recorded in the general ledger for financial accounting.
In open-item accounting, invoices are not accounted for. Transactions are accounted for once payment is received. Payments are controlled outside of accounting on the basis of supporting documents submitted as "unpaid invoices". During closing, the position is adjusted using invoices that have not been paid. Open-item accounting may be useful for smaller quantities of data. Debtors/creditors accounting is recommended, however, if the number of invoices and payments to account for is high.