Bookkeeping 101 - A Beginning Tutorial
There is a difference between bookkeeping and accounting. As you set up a business firm, you define that difference and decide what type of personnel you need - a bookkeeper, an accountant, and/or a controller - to set up your accounting system.
Bookkeeping 102 - Understanding and Using Debits and Credits
Debits and credits are one of the hardest accounting conventions to understand. Understanding debits and credits is the key to doing proper journal entries. This tutorial will help you.
Small Business Bookkeeping - Single-Entry or Double-Entry Bookkeeping
Small businesses must make a decision between single-entry bookkeeping and double-entry bookkeeping when they are established.
The Difference between Bookkeeping and Accounting for Small Business
Bookkeeping and accounting for small businesses are not the same even though the words are sometimes used interchangeably. Bookkeeping is the process of record keeping for the small business. Accounting is the function of interpreting the books and presenting the information.
The Accounting Equation
The accounting formula represents the relationship between the assets, liabilities and owner's equity of a small business. It represents the relationship between the balance sheet and income statement of the business firm.
Develop the Chart of Accounts for your Small Business
When you start a small business, develop a chart of accounts as part of setting up your accounting and bookkeeping system. The chart of accounts is an index of all the accounts where the company files its financial information.
The Source Document in an Accounting Transaction
A source document in an accounting transaction is evidence that the transaction has occurred. It should be recorded as a journal entry as soon as possible. Examples are canceled checks, invoices, purchase orders, and other business documents.
Accounting Journal Entries
When a small business makes a financial transaction, they make a journal entry in their accounting journal in order to record the transaction. There are actually two entries made - one is a debit to the appropriate account and the other is a credit.
Construct the General Ledger for your Small Business
The general ledger is the main accounting record for your business. All of the business's financial transactions are taken from the general accounting journal and recorded in the general ledger in a summary form.
How to Prepare a Trial Balance
After you complete your general ledger entries for an accounting cycle, the next step is to prepare a trial balance. A trial balance is the process of totaling the debits and credits from the general ledger to make sure they balance for the accounting period in question.
Adjusting Entries in your Accounting Journals
Adjusting entries are made in your accounting journals at the end of an accounting period. The purpose of adjusting entries is to adjust revenues and expenses to the accounting period in which they actually occurred.
Prepare the Financial Statements
One of the final steps in the accounting cycle is the preparation of the financial statements. The information from the accounting journal and the general ledger is used to develop the income statement, statement of retained earnings, balance sheet, and statement of cash flows -- in that order. Information from the previous statement is used to...
Closing Entries as Part of the Accounting Cycle
Closing entries are journal entries made at the end of an accounting cycle to set the balance of temporary accounts to zero to begin the next accounting period. The accounts that are closed are revenue, expense, and drawing accounts. The assets, liabilities, and owner's equity accounts are not closed because their ending balances are the...
How to set up and Manage a Petty Cash Account for your Small Business
Every small business needs a petty cash account as a part of accounts payable for small, daily business expenses. Setting up and managing your petty cash account is part of your bookkeeping function and office accounting system.
Asset Accounts in the Chart of Accounts
The Asset Accounts are the first category of accounts on a business firm's chart of accounts.