An account that keeps track, by date, of vendors that you owe money to and how much you owe them.
An account that keeps track, by date, of customers who owe you money and how much they owe you.
Accrual vs. Cash Basis
Under the accrual basis of accounting, transactions that affect a company’s financial statements are recorded in the period which the events occur, rather than in the periods in which the company receives or pays cash.· Under the cash basis of accounting revenue is recorded only when cash is received, and an expense is recorded only when cash is paid.
Anything of value that a business owns, including cash, accounts receivable, inventory and equipment.· Assets are shown in the Balance Sheet.
The process by which a bank account balance as shown on the bank's records is brought into agreement with the balance shown in your checkbook.
Bank accounts should be reconciled monthly.
The process of recording business transactions. Bookkeeping can include invoicing, writing checks, bank and credit card reconciliations, payroll, filling of Federal, State and other taxes, and providing financial statements.·
The volume of business a company does at which the revenue equals the expenses.· At this point a business does not have any profit or loss.
Chart of Accounts
A list of accounts used when grouping accounting transactions.· Each account has an account number.
A client usually needs the following for bookkeeping entries:
Sales Invoices, paid and unpaid
Bank Statements with returned checks, if available
Bills, paid and unpaid
Receipts for expenses indicating what the expense is for. For example, rent, auto, etc.
Credit card charges, indicating a description of the expense
Expenses for meals including tips; mark name of person involved, and date if not clear on the receipt.
Liabilities are amounts that a business owes to its creditors.· Liabilities are shown in the Balance Sheet.
The process of allocating to expense the cost of a plant asset over is useful life in a rational and systematic manner.
Statements that describe the financial condition of a business.· Such statements include the Income Statement, Balance Sheet and Cash Flows.· These statements are usually prepared monthly, quarterly or annually.
A financial statement that lists the revenues, cost of sales, various expenses and net income.· An Income Statement is also referred to as a profit and loss statement (P&L).
The ownership claim on net assets is called owner’s equity.· It is equal to total asset minus total liabilities.