This document provides guidance on proper bookkeeping. It outlines key bookkeeping concepts like the cash and accrual bases of accounting and double-entry vs single-entry bookkeeping. Important books to keep as an entrepreneur are also listed, including the cashbook, expenses book, creditors/debtors book, and inventory book. Maintaining proper bookkeeping allows businesses to track financial transactions, make informed decisions, and ensure the smooth running of operations.
This document provides guidance on proper bookkeeping. It outlines key bookkeeping concepts like the cash and accrual bases of accounting and double-entry vs single-entry bookkeeping. Important books to keep as an entrepreneur are also listed, including the cashbook, expenses book, creditors/debtors book, and inventory book. Maintaining proper bookkeeping allows businesses to track financial transactions, make informed decisions, and ensure the smooth running of operations.
This document provides guidance on proper bookkeeping. It outlines key bookkeeping concepts like the cash and accrual bases of accounting and double-entry vs single-entry bookkeeping. Important books to keep as an entrepreneur are also listed, including the cashbook, expenses book, creditors/debtors book, and inventory book. Maintaining proper bookkeeping allows businesses to track financial transactions, make informed decisions, and ensure the smooth running of operations.
This document provides guidance on proper bookkeeping. It outlines key bookkeeping concepts like the cash and accrual bases of accounting and double-entry vs single-entry bookkeeping. Important books to keep as an entrepreneur are also listed, including the cashbook, expenses book, creditors/debtors book, and inventory book. Maintaining proper bookkeeping allows businesses to track financial transactions, make informed decisions, and ensure the smooth running of operations.
BY Olusegun Famodimu ACA famodimuelijah@gmail.com https://linktr.ee/Shegofams TRAINING OBJECTIVES/LEARNING OUTCOMES
• INTRODUCTION TO BOOK KEEPING
• ADVANTAGES OF BOOK KEEPING
• IMPORTANT BOOKS TO KEEP AS AN
ENTREPRENEUR.
• TIPS ON KEEPING ADEQUATE BOOKS
Bookkeeping is the recording on a day to day basis of a company’s financial transactions and information pertaining to business. EXAMPLES OF TRANSACTIONS ❖ CASH SALES ❖ CASH PURCHASES ❖ CREDIT SALES ❖ CREDIT PURCHASES ❖ CASH EXPENSES ❖ CREDIT EXPENSES ❖ CASH DEPOSIT TO BANK ❖ CASH WITHDRAWALS FROM BANK INTRODUCTION TO BOOK KEEPING
EACH FINANCIAL TRANSACTION IS
RECORDED BASED ON SUPPORTING DOCUMENTATION.
THIS DOCUMENTATION MAY BE A RECEIPT,
INVOICE, A PURCHASE ORDER, OR SOME SIMILAR TYPE OF FINANCIAL RECORD SHOWING THAT THE TRANSACTION TOOK PLACE. INTRODUCTION TO BOOK KEEPING
BOOKKEEPERS ARE INDIVIDUALS WHO
MANAGE ALL FINANCIAL DATA FOR COMPANIES.
WITHOUT BOOK KEEPING, COMPANIES
MIGHT NOT BE AWARE OF THEIR CURRENT FINANCIAL POSITION AS WELL AS THE TRANSACTIONS THAT OCCUR WITHIN THE COMPANY. INTRODUCTION TO BOOK KEEPING
WITH PROPER BOOKKEEPING,
ENTREPRENEURS, BUSINESSES AND COMPANIES ARE ABLE TO TRACK ALL INFORMATION ON ITS BOOKS TO MAKE KEY DECISIONS TO ENSURE SMOOTH RUNNING OF THE BUSINESS. INTRODUCTION TO BOOK KEEPING
ACCURATE BOOKKEEPING IS ALSO
CRUCIAL TO EXTERNAL USERS, WHICH INCLUDES INVESTORS, FINANCIAL INSTITUTIONS AND THE GOVERNMENT. OTHER BENEFITS OF BOOK KEEPING
• IT GIVES COMPANIES A RELIABLE MEASURE OF THEIR
PERFORMANCE.
• IT PROVIDES INFORMATION ON GENERAL STRATEGIC DECISIONS.
• IT PROVIDES BENCHMARK FOR ITS REVENUE AND INCOME
GOALS.
• IT HELPS TO PROVIDE TRACK OF DEBTS OWED.
• IT SERVES AS A GOOD BASIS OF COMPARISON BETWEEN THE
PRESENT GOALS ACHIEVED AND THE FUTURE GOALS.
• DETAILED REPORTS WILL BE HANDY IN THE EVENT OF TAX AUDIT.
TIPS ON PROPER BOOK-KEEPING
BASIS OF ACCOUNTING ❖ THE CASH BASIS
❖ THE ACCRUAL BASIS
BASIS OF ACCOUNTING
❖ THE CASH BASIS
This is a basis of recording financial transactions
only when cash is involved. It means transaction is recorded only when payment of cash is made or cash is received.
This basis of record is suitable only in a small
business where only cash transaction takes place. No form of credit sales and purchases is allowed. BASIS OF ACCOUNTING ❖ THE ACCRUAL BASIS
The Accrual basis is a basis of recording financial
transactions when transaction occurs.
It means revenue is recognized when earned and
not necessarily when cash is involved.
The actual cash doesn’t have to enter or exit for the
transaction to be recorded. You can mark your sales and purchases made on credit right away. BASIS OF ACCOUNTING BOOK-KEEPING METHODS
❖ DOUBLE ENTRY BOOKKEEPING.
❖ SINGLE ENTRY BOOKKEEPING.
TIPS ON PROPER BOOK-KEEPING DOUBLE ENTRY BOOKKEEPING. ❖ Follows the principle that every transaction affects at least two (2) accounts.
❖ And for every debit entry, there must be a corresponding
entry credit.
❖ Using Double entry bookkeeping is suitable for large
businesses and business involve in buying and selling on credits.
❖ It is also more suitable because it leaves room for less
errors. In a way, it double checks the books because each transaction is recorded as two matching but offsetting accounts. TIPS ON PROPER BOOK-KEEPING
Personal A/C Real A/C Nominal A/C
DR: Receiver DR: What comes in DR: All expenses CR: Giver CR: What goes out (loses) CR: All incomes (gains)
Furniture has been purchased A vehicle has been purchased for Telephone bill amounting to from Godrej & Boyce Ltd on N8,000,000 by cheque N25,000 paid by cash credit of N2,00,000.
Journal Entry: Journal Entry: Journal Entry:
Dr: Furniture A/C N2,00,000 Dr: Vehicle A/C N8,00,000 Dr: Telephone expenses N25,000 Cr: Godrej & Boyce Ltd N2,00,000 Cr: Bank N8,00,000 Cr: Cash N25,000 TIPS ON PROPER BOOK-KEEPING SINGLE ENTRY BOOKKEEPING. ❖ SINGLE ENTRY BOOKKEEPING IS A STRAIGHTFORWARD.
❖ ONE ENTRY IS MADE FOR TRANSACTION IN THE BOOKS.
❖ THE TRANSACTIONS ARE USUALLY MAINTAINED TO
TRACK INCOMING REVENUE AND OUTGOING EXPENSES.
❖ THIS METHOD OF BOOKKEEPING SUITS SMALL PRIVATE
COMPANIES AND SOLE PROPRIETORSHIPS THAT DO NOT BUY AND SELL ON CREDIT, OWN LITTLE PHYSICAL ASSETS, AND HOLD SMALL AMOUNTS OF INVENTORY.
❖ INCOMPLETE BOOKS TO KEEP AS AN ENTREPRENEUR
❖CASHBOOK ❖EXPENSES BOOK ❖CREDITORS AND DEBTORS BOOK ❖INVENTORY BOOK BOOKS TO KEEP AS AN ENTREPRENEUR
CASHBOOK
THIS IS USED TO RECORD CASH
TRANSACTIONS, CASH SALES AND CASH PURCHASES, CASH DRAWINGS, CASH EXPENSES. BOOKS TO KEEP AS AN ENTREPRENEUR
EXPENSES RECORD
TO RECORD ALL COST OF OPERATIONS THAT A
COMPANY INCURS TO GENERATE REVENUE.
TRANSPORTATION, ELECTRICITY, WAGES ETC
BOOKS TO KEEP AS AN ENTREPRENEUR
CREDITORS AND DEBTORS BOOK
YOU CAN USE THIS TO RECORD ALL YOUR CREDIT
SALES & PURCHASES SO YOU CAN KEEP TRACK OF THOSE YOU ARE OWING AND THOSE OWING YOU. BOOKS TO KEEP AS AN ENTREPRENEUR ❖ INVENTORY BOOK
CAN BE USED TO RECORD YOUR STOCKS.
STOCKS OR INVENTORY ARE THOSE GOODS THAT ARE YET TO BE SOLD.
