#Basic bookkeeping for small business how to

4. Revenue accounts are listed Fourth when numbered, begin with the number 4.

3. Equity Accounts are listed Third when numbered, begin with the number 3.

2. Liabilities are listed Second when numbered, begin with the number 2.

1. Assets are listed First when numbered, begin with the number 1.

This order is also useful when preparing financial statements. The Chart of Accounts General Accounting Principle’s state that the accounts be organized in the following manner to create consistency amongst businesses.

Accounts are often assigned numbers that identify where the accounts are in the ledger or list of accounts.

The Chart of Accounts lists the accounts for a specific business.

Because each company is different, the types of accounts they have and how many of each type of account they have are also different.

Practice Let’s practice recognizing account types by completing the exercise in your handout on page 3

Some businesses earn all their revenue by selling products, others offer services, and many offer both products and servicesĪccount types Expense Accounts (The Costs of Running a Business)– Expenses are tracked through 2 main categories cost of goods sold and operating expenses The expense accounts will vary between businesses but often are very detailed so that a company can evaluate its profitability effectively.

Income Accounts (Revenue)– Revenue or Income is earned through business activities such as the sale of merchandise or services.

At the end of each year the net profits (or losses) from a business are transferred into the retained earnings or owner’s equity account.

Equity accounts include owner or shareholder’s contributions, draws, and retained earnings which are profits left in a business.

Equity Accounts (Value of the Business)– the difference between what a businesses owns and what it owes.

Your accounts payable account tracks all of your outstanding bills tracked by vendor name.

Liability Accounts (What you owe)– include loans, mortgages, lines of credit, account’s with suppliers, payroll expenses payable, GST and taxes payable, and your accounts payable account.

For tangible assets the value of the asset is amortized or spread out over multiple years.

The balances in asset accounts carry forward from year to year until the asset is liquidated.

Are generally valued over $500.00 and usable for more than one year.

Asset Accounts (What you own)– include bank accounts, petty cash, equipment, buildings and land.

There are standard account types which are the main categories that all businesses follow Assets, Liabilities, Equity, Revenue, Expense.

Accounts track all of your accounting transactions and allow you to categorize your transactions.

Corporate Tax returns are due 6 months after the corporations fiscal year end.Fiscal year ends may vary from the calendar year.

A Fiscal Year is an accounting time period that is one year long.

#Basic bookkeeping for small business how to

Learn what your accounting responsibilities are, basic accounting terminology, the basics of financial statements and how to prepare your files for year end E N D - Presentation Transcriptīasic Bookkeeping Starting up a small business? Working as an office administrator? Bookkeeping responsibilities can be overwhelming! In this course we will teach you the basics of bookkeeping.