Basic Bookkeeping For Small Business Can Save Money
Keywords: bookkeeping, bookkeeping system, bookkeeper, single entry bookkeeping, double entry bookkeeping
Basic bookkeeping consists of recording the prime business transactions of sales, purchases and cash. The accounting documents supporting and evidencing these transactions being called prime documents which are entered into the business books by a bookkeeper.
Sales Invoices
A sales invoice is a prime document. In more advanced accounting systems technical terms such as sales day books, sales ledgers, debtors and credit control are important but at the basic level bookkeeping of sales is the act of recording those sales in the business books.
A sales day book is basically a log of sales invoices issued by the business and this level of recording financial transactions is all that may be required for a small business. A simple list of the sales invoices which would be described as part of a single entry bookkeeping system.
A basic bookkeeping system for sales invoices would be a single entry bookkeeping system with minimal analysis of the total sales value. An accountant or bookkeeper may make these entries although in smaller organisations the records are often kept by the business owner.
Larger organisations may well maintain sales day books but would certainly also enter the sales invoices into an accounting system and would usually use accounting software to do so. Within the financial accounting package the sales would not only appear as a list making up the total sales turnover but would also be entered in a sales ledger.
Each sales invoice being allocated to the various clients to whom the sales had been made. The sales ledger at this stage of the bookkeeping represents the value of goods or services sold to each customer.
Purchase Invoices
A purchase invoice is a prime document and a purchase day book is a list of purchase invoices received from suppliers. The purchase invoice day book would not normally require further financial analysis of the type of expenditure. To that extent a simple purchase day book would be a good starting point for a simple set of accounts but require a little more sophistication requiring analysis by expense type for both financial control and taxation purposes.
A basic bookkeeping system for purchase invoices would be a single entry bookkeeping system that also had columns to analyse the expenditure into the expense categories required by the particular tax rules under which the accounts were being prepared.
Medium and larger organisations require to track and control purchase invoices to control costs and payments. In a mirror of the sales ledger system purchase invoices would also be entered by supplier into a purchase ledger. The easy way is to allocate each supplier a code number so that the accounting software can collect the amounts owed to each supplier the individual supplier accounts being the purchase ledger.
Cash and Bank Transactions
Quite apart from the single entry of sales and purchases is the recording by a business in its books of cash and bank receipts and payments. The third area of prime documents is the cash receipt or bank slip, given or received. Such documents may take many forms from the till roll of a retail business to the deposit slip at a bank but all are evidence of money changing hands.
In a small business cash and bank records may be maintained separately to the records of other prime accounting records. In a simple format the cash or bank records would be similar to the bank statement but showing the names of customers and suppliers or if multiple customers for example then the source of the money being received or paid.
Larger organisations and particularly using accounting software also code each receipt and payment to the same customer and supplier codes used to produce the sales ledger and the purchase ledger. In addition to recording the cash and bank transactions in the cash and bank accounts the amounts received and paid are also recorded in the sales ledger and purchase ledger.
By recording the cash and bank transactions in the ledgers the customer and supplier records making up the accounting ledgers then show the balances on each account and the recording of the financial transactions in this way is effectively the other side of the double entry bookkeeping system.
A small business not requiring sophisticated accounting records for financial control purposes and using a single entry as opposed to a double entry bookkeeping system could simply record receipts against the list of sales invoices and the payments against the list of purchase invoices.
Basic bookkeeping using single entry of prime accounting documents would be suitable for small business, requires very little accounting knowledge and when carried out by the business owner rather than a bookkeeper or accountant can save money,
Terry Cartwright, accountant and CEO at DIY Accounting, designs accounting software www.diyaccounting.co.uk on excel spreadsheets providing complete single and double entry bookkeeping systems
www.diyaccounting.co.uk
Previous Articles Highlighter:
Finding Top Multi Level Marketing Company (1)
Once you have signed up to join the program, you will be given a link that you can post in various places on the Internet. This link will include your program information that is used to track the number of sales you make.
DLP LCD Plasma HDTV It Will Soon Be Time To Choose (2)
Depending on your interests you will want to evaluate different types of displays and/or controls. Gamers will probably want different display qualities than a Home Theatre Buff, Sports enthusiast or Business users.
A History Of Trading (3)
It regulates the futures exchanges, brokerage firms, money managers and commodity advisors. Copyright © C. R. Ellsworth 2006 C. R. Ellsworth is retired from Corporate America and living in the 'Great North Woods'.
Before Bankruptcy (4)
Sit down with everyone in your Family that 'spends' money and discuss the daily expenditures. Write them down. I know we've all heard that before, 'Write down where ever penny goes'.
Wireless Home Theatre Systems. The Time Has Come. (5)
In size you can watch your Home Theatre Entertainment from 120" projected HDTV to small 12" Portable DVD players. There are different Display Technologies to consider. Plasma, LCD, OLED, DLC.
Seven Steps To A Better Photograph Part Two (6)
You, on the other hand, have no excuse not to make use of the fill flash technique, and doing so will greatly improve the quality and clarity of your photos.
Moving Tips For San Diego Mortgage Borrowers (7)
Develop a list of friends, relatives, and business colleagues who need to be notified of the move. Arrange to have utilities disconnected at your old home and connected at your new one.
Where Using Natural Stone Veneer Gives You The Best Bang For Your Buck (8)
Wherever you choose to use this veneer, your home will be more valuable and more beautiful. Dror Klar is an advocate and writer about Stone Building Products. Learn more by visiting his websites.
The Natural Stone Phenomenon Strikes The United States (9)
We all know that there have been many trends in decorating that have come and gone over the years. Wood paneling was very popular in the 1960's and 1970's, but not any more.
The Basics Of Selling Prints Online (10)
For them, it's a highly convenient way of finding the prints they need for their magazines, books, articles etc. Because of how well-used the internet is, and because of the demand for art prints, prints are quite in demand on the internet.
Newer Articles Highlighter:
Getting A Direct Student Loan (1)
Another benefit of this particular student loan is that the federal government only requires a minimal interest rate that most students and their parents can easily afford. Court helps people to learn about student loan consolidation programs.
Creating A Shabby Chic Look (2)
The end tables could become the center of attention with some antique candle sticks or a tea-set retired from the kitchen. Shabby Chic Not Just Plain Shabby The whole idea is to maintain a contrasting tension between the crisp, clean white elegance and the dull shabby red elements.
Great Tropical Decorating Ideas (3)
There is a kind of sparseness in spite of all the lushness which is what has to be borne in mind throughout. To achieve this remove all rugs, carpets, and throws.
Easy Guide To The Best Low Cost Health Insurance (4)
Your local agents might only be able to propose what they have available and not be able to propose what's soundest for you both financially and health-wise. A lot of insurers give an extra discount for "auto-pay" on your credit card in addition to saving you more.
Importance Of Private Label Articles (5)
Everybody wants to know what they are and, more importantly, what benefits they can get out of them for their internet business. In essence, Private Label Articles is a kind of license you acquire for material, which allows you to change and edit existing material and call it your own.
Bargain Prices In New Years Shopping (6)
The bargains prices on New Years shopping might also provide affordable socks that are warm and keep somebody's health from failing because they live on the street. When people find bargain prices on the things that they use everyday, they might choose to stock up for those rainy days when their family budgets can not support buying items that do not put shelter and food in the home.
How To Calculate The Volatility Of The Spread In Options Trading (7)
Four volatility ticks multiplied by a vega of .05 per tick gives us a value of $.20. Next we subtract $.20 from the June 70 option's present value of $2.00 and we get a value of $1.80 at 36 volatility.
Finding Cheap Flood Zone Insurance Rates (8)
Some insurance brokers are on a commission basis so when they do the search for you, they will really give you the cheapest quotes they can find so you will buy your flood zone insurance policy from them.
Product Review: SpamArrest (9)
I tried SpamArrest after noticing that a colleague was using it, but my expectations were not terribly high because the other filtering solutions that I had tried just did not work for me.
Business Clarity Should Permeate Your Business (10)
Often, your market will change and you will need to adjust and make changes with it to remain profitable but all too often business owners fail to see this until it is too late.
Permalink to Basic Bookkeeping For Small Business Can Save Money