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11 Dec 2025
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Bookkeeping Basics: An Overview
grace
@grace_gnga
1 / 4
Basic Accounting Terms and Transaction Types
Getting to grips with accounting starts with understanding what actually counts as a sale - it's simply the act of selling something to someone. Expenses are all those costs your business faces daily, like rent and salaries, that keep the doors open.
When it comes to payment timing, you've got two main types. Cash sales and purchases happen when payment occurs immediately - this can be actual cash, or card payments. Credit sales and purchases involve paying later, either through cash on delivery or open account arrangements.
The major downside of credit transactions? There's always that risk the customer might not pay up, which can seriously mess with your cash flow.
Remember: Every business transaction needs proper documentation - this isn't just good practice, it's essential for tax purposes and tracking your financial health.
The Accounting System Process
The accounting system follows a clear five-step process that transforms every business transaction into organised financial records. It starts with the actual business transaction (like a credit sale or expense), then moves to creating a business document (such as a receipt).
Next comes the books of prime entry - these include sales day books, purchase day books, cash books, and petty cash books. Think of these as your first port of call for recording transactions in an organised way.
The fourth step involves ledger accounts, where transactions from the books of prime entry get transferred regularly. These accounts are part of the double-entry system and include asset accounts and revenue accounts.
Finally, the trial balance lists all ledger accounts and acts as your control mechanism. It helps check that all transactions have been recorded correctly before you prepare your financial statements.
Top Tip: Keeping track of all business transactions isn't just about being organised - it helps you know exactly how much money you have and supports cash flow forecasting.
Essential Business Documents
Every business transaction generates paperwork, and understanding these business documents is vital for smooth operations. The main documents include quotations, purchase orders, sales orders, delivery notes, goods received notes, invoices, and credit notes.
The sales system creates a clear paper trail between customers and businesses. It typically starts when a customer requests details and places a purchase order, followed by the business providing quotes and creating sales orders.
Delivery notes get signed when goods are delivered, and if there are any issues, goods can be returned with proper documentation. This systematic approach protects both the business and customer.
The process ensures every transaction is properly recorded and can be traced back if problems arise later.
Key Point: Proper documentation isn't just bureaucracy - it's your legal protection and helps maintain good customer relationships when disputes arise.
Types of Business Discounts
Understanding different discount types helps you make sense of pricing strategies and invoice calculations. Trade discounts are definitive amounts deducted from list prices for certain customers - they encourage loyalty and get calculated before VAT.
Bulk discounts reward customers buying large quantities of goods. Like trade discounts, these come off the list price before VAT gets added, making them particularly attractive to businesses buying in volume.
Prompt payment discounts (also called settlement or cash discounts) encourage customers to pay invoices early. The key thing here is that it's entirely up to the customer whether they accept the discount or not.
All these discount types serve different business purposes - building loyalty, encouraging large orders, or improving cash flow through faster payments.
Business Insight: Companies use these discount strategies to influence customer behaviour - understanding them helps you spot good deals and understand pricing structures in the real world.
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The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
Bookkeeping Basics: An Overview
grace
@grace_gnga
Understanding basic accounting systems is crucial for any business to track money, manage expenses, and prepare for tax obligations. This overview covers the fundamental accounting process from initial transactions through to trial balances, plus essential business documents and discount types... Show more
Basic Accounting Terms and Transaction Types
Getting to grips with accounting starts with understanding what actually counts as a sale - it's simply the act of selling something to someone. Expenses are all those costs your business faces daily, like rent and salaries, that keep the doors open.
When it comes to payment timing, you've got two main types. Cash sales and purchases happen when payment occurs immediately - this can be actual cash, or card payments. Credit sales and purchases involve paying later, either through cash on delivery or open account arrangements.
The major downside of credit transactions? There's always that risk the customer might not pay up, which can seriously mess with your cash flow.
Remember: Every business transaction needs proper documentation - this isn't just good practice, it's essential for tax purposes and tracking your financial health.
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Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
The Accounting System Process
The accounting system follows a clear five-step process that transforms every business transaction into organised financial records. It starts with the actual business transaction (like a credit sale or expense), then moves to creating a business document (such as a receipt).
Next comes the books of prime entry - these include sales day books, purchase day books, cash books, and petty cash books. Think of these as your first port of call for recording transactions in an organised way.
The fourth step involves ledger accounts, where transactions from the books of prime entry get transferred regularly. These accounts are part of the double-entry system and include asset accounts and revenue accounts.
Finally, the trial balance lists all ledger accounts and acts as your control mechanism. It helps check that all transactions have been recorded correctly before you prepare your financial statements.
Top Tip: Keeping track of all business transactions isn't just about being organised - it helps you know exactly how much money you have and supports cash flow forecasting.
Sign up to see the contentIt's free!
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
Essential Business Documents
Every business transaction generates paperwork, and understanding these business documents is vital for smooth operations. The main documents include quotations, purchase orders, sales orders, delivery notes, goods received notes, invoices, and credit notes.
The sales system creates a clear paper trail between customers and businesses. It typically starts when a customer requests details and places a purchase order, followed by the business providing quotes and creating sales orders.
Delivery notes get signed when goods are delivered, and if there are any issues, goods can be returned with proper documentation. This systematic approach protects both the business and customer.
The process ensures every transaction is properly recorded and can be traced back if problems arise later.
Key Point: Proper documentation isn't just bureaucracy - it's your legal protection and helps maintain good customer relationships when disputes arise.
Sign up to see the contentIt's free!
Access to all documents
Improve your grades
Join milions of students
By signing up you accept Terms of Service and Privacy Policy
Types of Business Discounts
Understanding different discount types helps you make sense of pricing strategies and invoice calculations. Trade discounts are definitive amounts deducted from list prices for certain customers - they encourage loyalty and get calculated before VAT.
Bulk discounts reward customers buying large quantities of goods. Like trade discounts, these come off the list price before VAT gets added, making them particularly attractive to businesses buying in volume.
Prompt payment discounts (also called settlement or cash discounts) encourage customers to pay invoices early. The key thing here is that it's entirely up to the customer whether they accept the discount or not.
All these discount types serve different business purposes - building loyalty, encouraging large orders, or improving cash flow through faster payments.
Business Insight: Companies use these discount strategies to influence customer behaviour - understanding them helps you spot good deals and understand pricing structures in the real world.
We thought you’d never ask...
What is the Knowunity AI companion?
Our AI Companion is a student-focused AI tool that offers more than just answers. Built on millions of Knowunity resources, it provides relevant information, personalised study plans, quizzes, and content directly in the chat, adapting to your individual learning journey.
Where can I download the Knowunity app?
You can download the app from Google Play Store and Apple App Store.
Is Knowunity really free of charge?
That's right! Enjoy free access to study content, connect with fellow students, and get instant help – all at your fingertips.
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Most popular content in Accounting
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Can't find what you're looking for? Explore other subjects.
Students love us — and so will you.
4.9/5
App Store
4.8/5
Google Play
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user
The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.
Stefan S
iOS user
This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.
Samantha Klich
Android user
Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.
Anna
iOS user
Best app on earth! no words because it’s too good
Thomas R
iOS user
Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.
Basil
Android user
This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.
David K
iOS user
The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!
Sudenaz Ocak
Android user
In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.
Greenlight Bonnie
Android user
very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.
Rohan U
Android user
I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.
Xander S
iOS user
THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮
Elisha
iOS user
This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now
Paul T
iOS user