Knowing the ABC’s of bookkeeping helps you in knowing about the financial transactions of your business. If you are not aware of the basics of bookkeeping and keep on relying on the staff then there will be an end to your business soon.
The first rule of business is that you should never trust anyone besides you. Especially when it is the matter of handling the finances. You can surely assign an accountant to handle the matter of finance for you but you need to stay updated with that so no discrepancy occurs on that end.
When it is about financial matters, most of the companies face the problem due to that which is why you should be able to comprehend the ABC’s of bookkeeping.
Know the difference between accounting and bookkeeping because they may be similar in some things but they are different in nature. Keeping the records of the transactions along with the proof is known as the bookkeeping process.
Clear Records
You have to keep the clear records so that when it is the time of taxes return, you do not have to answer any irrelevant question but you would have the proof.
Any activity which occurs in the business needs to be recorded and should have the receipt attached in the books. There are different accounts which are located under the bookkeeping system. They are known as the types of accounts for bookkeeping. Understand these types in order to learn bookkeeping
Cashing
Working with the cash directly can be tough but that is the right management. You have to assign the person who is able to report and collect the cash as it is. There should be no discrepancy over the cash. The cash needs to be counted which is incoming and outgoing of the business. Everything needs to be recorded whether it is in the shape of cash or checks.
Accounts Receivable
Receivables are the ones where you make the payment of something and it arrives later. Such as you have made the payment for the shipment and it takes about 10 days to deliver on your business. You have to record it in the receivables and then when you receive the items.
Record those too in the inventory section. The payment for the shipment has been made when you order it so there is nothing due on your end, those are counted under the section of account receivables.
Inventory
Inventory is the stock which you have in the back room. Those are the things which you have in stock which you have to place on the shelves later. It is like having extra stuff in the bulk. You have to keep the record of it by making the list of the items and how many do you have.
It helps you in keeping the track if something is about to run out so that you are able to order it before the time it totally finishes so that the customers do not have to face the loss. If the customer once feels that you are out of stuff most of the time then they would not want to purchase things for you but would find alternative for shopping sooner than you know it.
So it is better that you work ahead and prepare the inventory list so that you are updated.
Accounts Payable
Account payable is when you get the items for the business but would make the payment later. Everyone likes to keep some amount of the profit with them so that it can work as their backup.
Which is why there is an option for the accounts payable that when next big profit comes then the payable would be clear. You have to keep it under the record of bookkeeping so that you can return it back on time without getting interest on the things. Most of the times it is acceptable as it works that way within the books since ever.
These are just few things which you need to know about bookkeeping but to learn more you have to enroll in the programs. It is always helpful to know about additional information so make sure that you do not miss out and run the business wisely.
