Let’s face the fact; there are so many business owners and entrepreneurs today who are masters in the production of great products or services and winning over the heart of their potential customers. But many of them have little or no knowledge of the basics of bookkeeping which is the foundation of all businesses.

Confused?

Well, finances play a significant role in business, in regards to this, accounting along with bookkeeping are the two critical processes. Here, we will be looking at the basics of accounting, so as to say, the most common type of account for business one should be aware of.

  1. Account payable

Your account payable portrays the money you ought to have sent out of business, in other words, the money that should have been paid to a third party. It is an important aspect of bookkeeping as it helps ensure timely payments.

  1. Account receivable

If a product is sold or a service is offered, and payment for such goods or service is not received immediately, the sum is recorded in your account receivable, this aspect of bookkeeping needs to be tracked.

  1. Cash

This is the most fundamental aspect of bookkeeping. To follow the flow of cash, two journals is being used i.e. cash receipt and cash disbursement.

  1. Inventory

The list includes all the items you have in stock including all your equipment and also the money sitting on a shelf.

  1. Loan payable

This account helps track what you own and what you don’t. It takes record of money borrowed to purchase equipment, furniture, and other items.

  1. Owner’s equity

This account tracks the entire amount each, and every one of the investors puts into the business and initiates a good rule to every owner taking note of everything they have invested in the firm.

  1. Payroll expenses

This is considered as the biggest cost of all for many businesses, attempting to shrink this aspect without taking into account professional bookkeeping might pose a lot of risk to your business.

  1. Purchases

The investment account helps track all finished and raw goods that might have been incurred for the firm. It’s a major component used in calculating the cost of goods sold. Its difference from the sales gives the company’s gross profit.

  1. Retained earnings

This account tracks all profit which is reinvested in the business. This cost is an increasing value, i.e. they appear as a total running cost that has been retained since the company started. This account is critical to business owners and lenders so as to track how well the business has grown over time.

  1. Sales

The sales report helps track all incoming revenue from the total cost from what has been sold. It allows business owner realize his stand if properly recorded.

Today, a lot of business owners think bookkeeping is not needed for their business to be successful. Meanwhile, seeking knowledge from a reliable, professional bookkeeper can be one’s best business asset in running one’s business. Find out more in this site : payrollserviceaustralia.com.au

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