Bookkeeping, a process in accounting, is a task that involves keeping records of the transactions of the businesses. These transactions include purchases, sales, payments, and more.
Many businesses and companies can be excellent at providing good services and manufacturing innovative products. However, basic bookkeeping isn’t their expertise. Thus, a bookkeeper comes into the picture. Several companies can be hired to perform the bookkeeping task of the company. Bookkeepers Sunshine Coast is considered one of the best companies for bookkeeping.
Bookkeepers have the responsibility of managing and recording the most or all of the business’s transactions. Their job description includes the production of financial reports along with financial statements for managers and supervisors. They are responsible for transaction records as well.
It is crucial for a company owner to know what bookkeeping is all about and what types of accounts your hired bookkeeper uses, this can help him measure the success or failure of his business and avoid cash flow problems.
Here are some tips of bookkeeping account basics you should be aware of:
- Purchases: This type of account is used to calculate the gross profit by subtracting the Cost of Goods Sold from Sales. It is also the account that is used for recording the cost of the raw materials or finished products bought by the company.
- Sales: This is the account where the company records revenue coming. The sales account is to be understood well and often needs to be checked to know where the company lies and if it is going in profit or loss.
- Loans Payables: This account is where the money which you have borrowed to purchase any required asset. You need to check this account to know what you owe and when it needs to be paid back.
- Inventory: This is the amount of stored stock you have, which can be sold if put on sale â€” these need to count by hand once in a while to test the written numbers in the account.
- Cash: The account is where all your business transactions pass through. The cash account is such an essential account that bookkeepers use two journals, cash payments, and cash receipts.
- Retained Earnings: This account keeps in track of all the money that is reinvested back into the business and not paid to owners. This account is essential for the lenders and investors who want to know the performance of the company over a period of time