Initiation to Accounting
Senior 1 · Entrepreneurship
Initiation to Accounting
Lesson 1 of 5
25 min
Nyiraneza runs a small kiosk in Gisenyi, Rubavu District. She sells milk, soft drinks, bread and airtime from early morning until dark, and customers never stop coming. Yet when her cousin asked, "Did the kiosk make a profit last month?", she could not answer.
Money had come in all month, but money had also gone out: to the milk collector, to the soft-drink depot, to the baker, to the moto driver, and some to her own family. A few regular customers had taken bread "until Friday". Nothing was written down. (An illustrative case.)
Think about it: what would Nyiraneza need to know to answer her cousin's question?
To answer the question, Nyiraneza needs records: a written note of every amount that came in and went out, with its date and reason. Keeping those records is called bookkeeping. Using them to explain how the business is doing is called accounting.
Definition
Transaction: an exchange of money, goods or services between a business and another person or business.
Example: Nyiraneza sells a bottle of soda for Frw 600: the soda leaves the kiosk and Frw 600 comes in.
Definition
Bookkeeping: the regular, accurate recording of a business's transactions in its books (notebooks, a spreadsheet or an app), in date order.
Example: writing "Sold 12 bottles of soda, Frw 7,200" in the kiosk's notebook the moment the day's sales are counted.
Definition
Accounting: recording, classifying and summarising a business's transactions, and then interpreting and reporting the results so that people can make decisions. Bookkeeping is the first part of accounting.
Example: adding up a month of Nyiraneza's records to find her profit and advising her to stop selling bread on credit.
Definition
Bookkeeper and accountant: a bookkeeper records the transactions and keeps the books up to date; an accountant is trained to classify, summarise and interpret them, prepare reports and give financial advice.
Example: a hotel's bookkeeper enters every receipt; its accountant tells the manager whether the new restaurant is profitable.
Accounting follows four stages. Bookkeeping covers the first two; accounting covers all four.
| Bookkeeping | Accounting | |
|---|---|---|
| Main question | What happened, when, and for how much? | What do the figures mean, and what should we do? |
| Main task | Recording transactions accurately, every day | Classifying, summarising, interpreting and reporting |
| Done by | A bookkeeper, cashier or the owner | An accountant, or an owner who has learned accounting |
| Result | Up-to-date books: a cash book, sales and purchase records | Reports: profit or loss, what the business owns and owes, advice |
| Skill needed | Care, honesty, neat handwriting or data entry | Training in accounting, analysis and judgement |
| In Nyiraneza's kiosk | Writing each day's money in and money out in a notebook | Working out the month's profit and deciding whether to stop credit sales |
Tip
Bookkeeping records; accounting explains. If you are writing down what happened, you are bookkeeping. If you are asking what it means and what to do next, you are accounting.
Nyiraneza bought a notebook and ruled three columns. Before opening she counted Frw 15,000 in the drawer: her opening cash. She wrote every amount during the day and counted again at closing time. (Illustrative figures, Frw, Monday 2 March 2026.)
| Details | Money in (Frw) | Money out (Frw) |
|---|---|---|
| Bought 12 litres of milk from the collector | 6,000 | |
| Bought one crate of soda from the depot | 5,400 | |
| Bought bread from the baker | 3,600 | |
| Moto to carry the crate | 500 | |
| Sold 30 cups of milk | 9,000 | |
| Sold 12 bottles of soda | 7,200 | |
| Sold bread | 4,500 | |
| Sold airtime | 6,000 | |
| Totals | 26,700 | 15,500 |
The cash she should find in the drawer at closing time is:
Worked example
Checking the drawer
Step 1: total money in.
Step 2: total money out.
Step 3: expected closing cash.
Step 4: compare with the count. Nyiraneza counts Frw 26,200 in the drawer, so the record and the cash agree. If she had counted Frw 25,200, the Frw 1,000 gap would tell her that something was not written down, or that change was given wrongly, or that money went missing.
Warning
The money in the drawer is not the profit. The Frw 26,200 includes the Frw 15,000 she started with, and she still has unsold milk and soda. Profit compares what was earned with what was spent, over a whole period (Lesson 2). Records are what make that calculation possible.
CrashCourse, "Understanding Financial Statements and Accounting: Crash Course Entrepreneurship #15" (about 13 minutes). Watch for why a business needs organised records and when an owner should get help from a bookkeeper or an accountant. The examples are American and in US dollars; the financial statements in the second half are for later years.
Practice
Sources and credits
Written by Ganzaa: the Gisenyi kiosk case, the flowchart, the tables, the worked example, the activity and the practice items. All figures are illustrative (2026).
