Bookkeeping For Dummies, 4th UK Edition

Product Information

Financial statement: Generally refers to one of the three primary accounting reports of a business: the balance sheet, statement of cash flows, and income statement. Sometimes financial statements are simply called financials. Internal financial statements and other accounting reports to managers contain considerably more detail, which is needed for decision-making and control.

The question is whether or not you as the business owner with limited knowledge want to do this job yourself or hire the services of a professional. I take you through the principles and methods of entering financial data into the business books in an organized way... Current liability:An amount owed by the business that is due within the next 12 months, including scary stuff such as credit cards.

Cash flow: An ambiguous term that can refer to several different sources of or uses of cash. This term is often shorthand for cash flow from earning profit or from operating activities. Some friendly advice: When using this term, always make clear the particular source or use of cash you have in mind!

Accounting = analysing the financial information and creating a financial strategy What’s involved in bookkeeping?Open a bank account using your company name and tax identification number. Activity in the business account should not include any personal expenses. Separating your expenses can protect your personal assets from business liability or a lawsuit. If your business is a corporation, for example,it should be a legal entity separate from you. Bookkeeping and accounting are often confused. In fact, bookkeeping is a small but vital part of the overall accounting function. Bookkeeping is the process of recording and reporting financial information, while accounting is the process of using such data to establish the business’s financial position and make decisions about how the finances are managed. Forms - 30 free PDF forms that can be printed and used by small business owners who prefer manual bookkeeping, or anyone needing to practice. Single Entry where figures are entered once - this is the cash book - great for starting up small and for easing you in to the next method. Business owners should use the accrual basis of accounting so that their financial statements are clear and accurate. The accrual method matches revenue earned with expenses incurred to generate the revenue, which presents a clear picture of company profit.

Equity:The ‘interest’ that shareholders or an owner has in the business, including both capital contributed and the profit or loss built up over time. Fixed or capital assets: The shorthand term for the variety of long-life physical resources used by a business in conducting its operations, which include land, buildings, machinery, equipment, furnishings, tools, and vehicles. These resources are held for use, not for sale. Please note that fixed assets is an informal term; the more formal term used in a balance sheet is property, plant, and equipment.Successful businesses need financial information to control costs, manage cash flow, and generate a profit. Without reliable data, you may not be able to make the best decisions for your business. A bookkeeping system provides the information you need to manage your operations. When it comes to doing your tax return, you can just add these up and enter the figures in the appropriate place on the form. Trial Balance: A business document where all ledgers are compiled into debit and credit columns. This is to make sure a company’s bookkeeping system is mathematically correct. In the balance sheet, the cash balance is the ending balance in the cash flow statement. In the income statement, the net income is also the retained earnings balance in the balance sheet. Net income increases retained earnings. In this case, the books stay in balance because the exact dollar amount that increases the value of your Furniture account decreases the value of your Cash account. At the bottom of any journal entry, you should include a brief description that explains the purpose for the entry.