All businesses need to properly record their financial transactions for taxation purposes, and should also do it to stay on top of their financial situation. Since not all business owners posess bookeeping knowledge, you may want to outsource your bookkeeping rather than hire an employee to do so.
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Inventory:

Inventory is usually the largest current asset of a business that sells products. If the inventory account is greater at the end of the period than at the start of the reporting period, the amount the business actually paid in cash for that inventory is more than what the business recorded as its cost of good sold expense.  When that occurs, the accountant deducts the inventory increase from net income for determining cash flow from profit.

Expenses:

The prepaid expenses asset account works in much the same way as the change in inventory and accounts receivable accounts. However, changes in prepaid expenses are usually much smaller than changes in those other two asset accounts.
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A balance sheet is a picture of the financial condition of a business at a specific point in time. The activities of a business fall into two separate groups that are reported by an accountant. They are profit-making activities, which includes sales and expenses. This can also be referred to as operating activities. There are also financing and investing activities that include securing money from debt and equity sources of capital, returning capital to these sources, making distributions from profit to the owners, making investments in assets and eventually disposing of the assets.
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The type of business you are in will affect the type of records you keep in a number of ways. Whatever system of bookkeeping you use, the details will have to be adapted to your special needs. It is important to have all the information you need for your own use in managing the business and for tax purposes. At the same time, your records should not be cluttered with details that aren’t really necessary.
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Most people probably think of bookkeeping and accounting as the same thing, but bookkeeping is really one function of accounting, while accounting encompasses many functions involved in managing the financial affairs of a business. Accountants prepare reports based, in part, on the work of bookkeepers.

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