From the course: Accounting Foundations: Bookkeeping

The importance of routine bookkeeping

From the course: Accounting Foundations: Bookkeeping

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The importance of routine bookkeeping

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- At its heart, bookkeeping is about collecting information, getting things recorded. Because once events are recorded, then we can organize those events and start making things better. - [Man In Blue Shirt] For example, Walmart has 10 billion customer visits per year. In order to operate, Walmart must have an organized bookkeeping system in place to keep track of what those customers bought, how much they paid, what items need to be ordered, and so forth, 10 billion visits per year. Walmart needs a good bookkeeping system. - Google is the most visited website on the internet. There are between one trillion and two trillion Google searches per year. Now, how does Google make money? Well, Google makes money by charging advertisers for customer views or customer clicks. Now, how can the company charge those advertisers unless Google has system in place of keeping track of the number of clicks and what people click on? Now, the Google search engine is awesome. The Google bookkeeping system is equally as awesome. - [Man In Blue Shirt] Without bookkeeping, Walmart and Google could not continue to function. Bookkeeping seems mundane, but that's where it all begins. - Now, let's make this more personal. Think about you and your personal budget. In fact, let's focus on your food budget. How much did you spend in the past 12 months on food? - The honest answer for most of us, for me, for example, is, I'm not sure how much I spent on food last year. I could use a better bookkeeping system. - If I want to start making better decisions, changing my behavior with respect to how much money I'm spending on food, I first have to have a system in place where I keep track of it. - [Man In Blue Shirt] Simply stated, bookkeeping is the preservation of a systematic, quantitative record of an activity. And until you have a record of an activity, you really can't make any sophisticated decisions with respect to that activity. - You got to get it written down. You got to get it recorded. Once that happens, then you can start to make more informed decisions. - We can use the past to help us make better decisions for the future, but it starts with getting things written down. That is bookkeeping.

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