Bookkeeping in a business firm could be the basis for the firm’s accounting system. Bookkeepers are accountable for recording and classifying the accounting transactions of the business firm or organization and strategies which includes recording those transactions.
If you’re your small business owner, you either need to put up your accounting system or perhaps you need to hire anyone to arrange it for you. If you’re self-employed and it is a one-person business, you will do it yourself. If you plan to hire staff and anticipate a whole lot of growth, you might hire a controller to take care of your financial management and accounting.
In case your business is likely to grow, however, you anticipate slow growth, you might hire an accountant or bookkeeper to manage the accounting system.
Bookkeeping: Accountant and Controller
Where the bookkeeper records and classifies the financial transactions associated with the company, the accountant proceed with the next steps to analyzes, reviews, reports, and interprets financial information of the company.
On the other hand, the controller is a company’s chief accounting officer. He/she is accountable for setting up and maintaining the business’s accounting system. The controller is in charge of the financial and managerial accounting which includes managing the firm’s accounting data suitably and responsibly. A controller is normally hired when the business or company gets larger.
Why Manual Bookkeeping?
This tutorial on bookkeeping teaches you basic bookkeeping without using any software or computer program. Why must you understand that since there are so many computer programs available for you to use? Remember the old saying, “Garbage in, garbage out?” You need to understand the basic bookkeeping behind that, which you come right into the computer program to type in the correct information.
Single or Double Entry Bookkeeping: Which is Which?
Single-Entry bookkeeping is a lot like keeping your check register. You record all the transactions while you pay some bills and make deposits to your business account. It only works if the current business is a small company with a decreased amount of transactions.
On the other hand, if your company is a little bit complex, you will want to put up a double-entry bookkeeping system. Two entries, at the very least, are manufactured for each transaction. A debit is built to one account, and credit is built to another accounting. That’s the key to double-entry accounting.
Learn the Basics: Assets, Liabilities, and Equity
Assets: You will see the asset, liability, and equity accounts if you look at the format of the balance sheet. Asset accounts normally focus on the cash account plus the marketable securities account. Then, inventory accounts receivable, and assets that are fixed as land, buildings, and plant and equipment are also present in the sheet, and these are tangible assets. They can be touched by you. Firms also provide intangible assets such as customer goodwill.
Liabilities: The liability accounts on the balance sheet have both current and long-term liabilities of the business. Current liabilities are often accounts payable and accruals. Accounts payable are normally what the company owes to its suppliers, credit cards, and business loans.
Equity: The equity accounts include most of the claims the owners have against the business. If the firm has brought on other investments, then that will be listed under the equity account.
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