Bookkeeping for dummies

If you plan to take it up as a career, you might want to consider doing a professional qualification, which will acquaint you with bookkeeping in greater depth. If you are looking to educate yourself on the bookkeeping world, this is a great start. Bookkeeping For Canadians For Dummies includes information on keeping track of transactions … The four different types of business structures often involve different kinds and levels of accounting that the bookkeeper must be aware of and capable of performing. Equity includes the claims owners have on the assets based on their portion of ownership in the company.

• The closing-out process involves making key adjustments to record depreciation of your assets, and calculating and recording your interest payments and receipts in your books.
• The asset values reported in the balance sheet are the amounts recorded when the assets were originally acquired.
• In Part II, I explain how you enter your financial transactions in the books, how you post transactions to your General Ledger , and how you track all the transaction details in your journals.
• John A. Tracy, CPA, is an award-winning professor emeritus of accounting at the University of Colorado at Boulder.

Many lenders prefer the acid test ratio when deciding whether to give you a loan because of that strictness; it doesn’t include the inventory account in the calculation. Needs to review the security of your connection before proceeding.

Record details

Use the information collected by your bookkeeping system to monitor sales, review discounts offered to customers, and track the return of products. All three elements are critical to gauging the success of the sales of your products. The granddaddy of your bookkeeping system is the General Ledger. In this ledger, you keep a summary of all your accounts and the financial activities that took place involving those accounts throughout the year. If you don’t carefully plan your bookkeeping operation and figure out exactly how and what financial detail you want to track, you’ll have absolutely no way to measure the success of your business efforts. Like most businesspeople, you probably have great ideas for running your own business and just want to get started.

But this book is not a textbook, and you will be disappointed if you want that sort of complete detail of every concept. So read this book once you are thorough with all the bookkeeping concepts.

Icons Used in This Book

Accounting is the total structure of records and procedures used to record, classify, and report information about a business’s financial transactions. Bookkeeping involves the recording of that financial information into the accounting system while adhering to solid accounting principles. You can’t keep books unless you know how you want to go about doing so. The two basic accounting methods you have to choose from are cash-basis accounting and accrual accounting. The key difference between these two accounting methods is the point at which you record sales and purchases in your books. If you choose cash-basis accounting, you record transactions when cash changes hands only. If you use accrual accounting, you record a transaction when it’s completed, even if cash doesn’t change hands.

• Tip.eps In addition to increasing accuracy and cutting the time you take to do your bookkeeping, computerized accounting also makes designing reports easier.
• You can read a chapter, implement the ideas, and then read another chapter and do the same.
• The two basic accounting methods you have to choose from are cash-basis accounting and accrual accounting.
• Few small businesses have accountants on staff to check the books and prepare official financial reports; instead, they have bookkeepers on staff who serve as the outside accountants’ eyes and ears.
• I talk more about how to use your bookkeeping system to manage inventory in Chapter 8.

Bookkeepers are generally entrusted with keeping the Chart of Accounts, the General Ledger, and the company journals, which give details about all financial transactions. For cash basis accounting, you don’t record anything in the books until you pay for the products bookkeeping with cash on July 1st. For accrual accounting, you’d record the purchase on June 15th in accounts payable as well as in the account where you record purchases. A financial statement that reports assets, liabilities, and owner’s equity on a specific date.

So You Want to Do the Books

You can make your information gathering more effective by using a computerized accounting system, which gives you access to your financial information in many different formats. Controlling who enters this financial information into your books and who can access it afterward is smart business and involves critical planning on your part.

Check.png Bold text highlights keywords in bulleted lists and indicates the active parts of numbered steps. Check.png New words are italicized and accompanied by an easy-to-understand definition. This program is the basic level of QuickBooks for use in your business; you can also find online and more-advanced versions. Get full access to Bookkeeping For Dummies, 2nd Edition and 60K+ other titles, with free 10-day trial of O’Reilly. Doug Lowe has written a whole bunch of computer books, including more than 35 For Dummies books …

The final 20 pages are articulated to test the readers on the concepts. This book is short and serves the purpose of learning and applying professional bookkeeping. This book provides checklists like “new job checklists,” “master calendar,” etc., and all forms a bookkeeper would need while maintaining a company’s books. This book also comes up with quizzes at the end of each chapter which helps you judge how much you have learned and assists you in handling bookkeeping in business functions.