E-Book Overview
Addressing a common problem for small-business owners, this accessible handbook is the key to understanding the ins and outs of accounting. Demonstrating how to correctly maintain records and apply bookkeeping rules, this guide demonstrates how to keep track of all financial matters and monitor the overall health of any business. Avoiding complex and burdensome accounting jargon, this clear and concise overview translates the essentials into practical business language, answering the most frequently asked questions presented to accountants by small-business owners today. Topics covered include accounting components such as sales, expenses, assets, liabilities, and owners' profits.
E-Book Content
Accounting Savvy for Business Owners Philip B. Goodman CPA
CPA911 Publishing, LLC Philadelphia PA
Accounting Savvy for Business Owners ISBN-10: 193292518X ISBN-13: 978-1932925180 Published by CPA911 Publishing, LLC March 2010 Copyright 2010 CPA911 Publishing, LLC CPA911 is a Registered Trademark of CPA911 Publishing, LLC. All rights reserved. No portion of the contents of this book may be reproduced in any form or by any means without the written permission of the publisher. CPA911 Publishing LLC has used its best efforts to make sure the information in this book is reliable and complete. Because of the possibility of human or mechanical errors by our resources, we make no representations or warranties for the accuracy or completeness of the contents of this book, and specifically disclaim any implied warranties. The publisher disclaims any responsibility for errors or omissions or the results obtained from the use of the information in this book. Peachtree is a registered trademark of Sage Software, Inc., and is used with permission. QuickBooks is a registered trademark of Intuit Inc., and is used with permission. Windows, Microsoft Excel and Microsoft Word are registered trademarks of Microsoft Corporation, and are used with permission.
Table of Contents Acknowledgments.................................................xiii Introduction........................................................... xv Dedication............................................................xvii Chapter 1: Basic Accounting Rules......................... 1 The Ledger.............................................................. 1 Making Sense of the Debit and Credit Labels.................. 3
Accounting Categories............................................ 4 Assets............................................................................... 4 Liabilities........................................................................... 5 Equity................................................................................ 6 Income.............................................................................. 7 Expenses.......................................................................... 8
Cash Basis Vs. Accrual Basis Accounting............. 10 Cash Basis Accounting................................................... 11 Accrual Basis Accounting............................................... 12 Selecting an Accounting Method.................................... 13
Fiscal Vs. Calendar Year....................................... 14 Chapter 2: Accounting Components..................... 17 Chart of Accounts.................................................. 18 Naming Accounts............................................................ 18 Using Account Numbers................................................. 19 Divisionalized Chart of Accounts.................................... 21
Transactions.......................................................... 25 Journals................................................................. 26 Types of Journals............................................................ 26 Jou