#Bookkeeping books ideas trial#

General ledger: This traditionally lists all the individual accounts needed to delineate the assets, liabilities, equity, revenue, expense, gain and loss transactions of your business.

These might include the cost of renting your building, your office supplies, your payroll and the like. Your expenses might be items you need to make a product you sell.

Expenses: What you spend to keep your business running.Equity: The value of your business after you've paid back your liabilities and who owns it (that equity might be all yours or shared with a partner or investors).While laborious, catching these discrepancies is the real benefit of double-entry bookkeeping. If your debits and credits don't match, someone must go through each item until you find the source of the error.

#Bookkeeping books ideas trial#

When you check everything, it's called creating a trial balance, which is just a way of telling you whether your debits and credits are accurate. Credit cash when you buy an asset debit an asset account (for instance, 'computer expense') when you spend money for that asset.

Double-entry bookkeeping: By recording each entry as credit and debit, you see the source of your money and where you're spending it.

After you subtract your cost of goods sold from your net sales (that's your total sales revenues fewer sales discounts, allowances or returns), you get your gross profit. So, if you're a bakery, these would be materials such as flour, sugar, and eggs, as well as the cost of using the kitchen in which you bake.

Cost of goods sold (COGS): If you make a product, the sum of the costs is directly related to making that product.

Cash flow: A comparison of the money you usually receive against the money you need to pay.

With it, you can assess the overall financial health of your organization.

Balance sheet: This document summarizes all your assets (what you own) and compares them to all of your equity and all of your liabilities (what you owe).

These might be items such as property, vehicles, cash, a computer, or the right to use a particular parking space.

Assets: Things you own, physical or intangible.

Conversely, you may have worked all month for one client but haven't yet been paid for that work. You might owe for that shipment of raw materials you just received. The benefit of accrual-based accounting is that it lets you know that while you may have cash on hand, you shouldn't spend it freely. In cash-based accounting, you would have recorded when you paid or received the money. If you're using accrual-based accounting, you record accruals (both positive and negative) at the time of the sale.

Accruals: Expenses or revenue you've incurred but haven't paid yet (this means accounts payable and accounts receivable are accruals).

Accounts receivable: You've done the work and sent the bill, but the client's check is in the mail.

If you've bought a computer that you haven't yet paid for, that's an account payable.

Accounts payable: This is money you currently owe vendors or suppliers but haven't yet paid.For instance, you may want to know how you did in February.

Accounting period: This is the specific stretch of time over which you're looking at your business.Items on this list include sales, cost of goods sold, salaries - all of the business activities you do. The complete list of your accounts is called your chart of accounts. Accounts group similar business activities for ease of analysis (i.e. When you're ready to undertake your own bookkeeping, here's the syllabus for your non-degree course: Related: Finding the Right Solution for Your Bookkeeping Needs Bookkeeping 101