5 BOOKKEEPINGBASICSEvery small business owners must know.
BOOKKEEPING 101:
Most business owners got skills on theselling aspect of the business but
lack basic knowledge in bookkeeping.
A REQUIREMENTFOR SMALLBUSINESS
The business may have an in housebookkeeper but when the owner himself isunable to understand the finances all will
be futile.
NO KNOWLEDGEMEANS NOPROGRESS
Perhaps engaging on study sessions tofully understand books might be helpful.
But before enrolling, here are 5 of thecommon bookkeeping account typesrelevant to small business owners.
A CRASHCOURSE OF THE
BASICS
CASHIn the cash account, all businesstransactions were passed.
In order to keep up, bookkeepers use twojournals:
CASH RECEIPTS
CASH DISBURSEMENT
CASHRECEIPTSJOURNALA journal that let you keep track ofreceived cash by creating a record.
C
A
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H
CASH RECEIPTSJOURNAL C
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HINCOME and DEBTORS - major categories
SUNDRY - various miscellaneous (sample:
capital or loan cash received)
BANK - used to show total cash from specific
period.
DISBURSEMENTA journal kept by accountants to record
financial expenditures of the company.
Function as 'checkbook ledger'
C
A
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CASH
ACCOUNTSRECEIVABLESThis is more applicable to companies that sellsproducts or services.
Tracking of receivables is critical due to itnot being collected immediately.
OUTSOURCED ACCOUNTING
For an assured timely sent bills or invoices,perhaps engaging on an
would be beneficial.
ACCOUNTSPAYABLEThe money owed to creditors.
Handling of your bookkeeping well willassure you of unmissed payments.
TIP: Paying your bills early couldlead to discounts.
OWNERS'EQUITYKeeps track of amount put by each owner inthe business.
The books must contain all owners' equityaccounts to avoid biased order.
RETAINEDEARNINGSCumulative earnings that shows the moneyretained since the company started.
Keeping track of this account will show ifthe business was a success or a failure overtime.
FORMULA:
Retained Earnings (RE)= Beginning RE + Net Income - Dividends
BENEFITS OF KEEPINGTRACK OR YOUR RETAINED
EARNINGS:
The earnings could be invested to areas ofthe company to create growth opportunities.
SAMPLE:
Addition of newmachinery.
Allot money on researchand development.
THANKYOU!