Basic Bookkeeping
Module One: Introduction No matter what you do you should really learn to appreciate numbers. Welcome to Basic Bookkeeping!
The company accountant is shy and retiring. He’s shy a couple of million bucks, that’s why he’s retiring! Milton Berle
Overview of Course Objectives
Terminolog y
Cash and accrual
Journal and ledger
Auditing
Module Two: Basic Terminology (I)
You really have to start at the beginning, or you will get lost. So let’s start there, with some basic terminology.
A bank is a place that will lend you money if you can prove that you don’t need it. Bob Hope
Balance Sheet Assets Liabilities Equity Snapshot Current finances
Assets
Owned or controlled Economic value
Liabilities Future sacrifices Responsibility to another Settlement of a debt
Equity
Ownership of assets After debts are paid Can be sold for gain
Income Statement Summary
Performance
Time
Revenue
Expenses
Revenue Fee paid to a lender Income from products or services Monies received from a transaction
Cost of Goods Sold Cost of producing a product Cost of inventory sold COGS Purchases made minus ending inventory
Expenses Depreciation Cost of production
Wages
Expenses
Accounting Period
Track and report operating results
Usually 12 months
Can begin and end anytime
Review Ownership of any form of value is considered an asset Liabilities are probable future sacrifices of income or assets Expenses are the cost of producing revenue through the sale of goods or services
Module Three: Basic Terminology (II)
In this unit, we will finish up with the basic accounting terms that are bound to impress at the next corporate fundraiser for the IRS.
Knowledge is like money: the more he gets the more he craves. Josh Billings
Accounts Receivable
Money owed to a business
Goods or services provided
Accounts Payable
Debt owed to creditor
Services or goods purchased
Depreciation Decline in value Over time Tangible assets
General Ledger
Permanent
Classified record
Each account
Interest Compensation
Interes t
Risk Cost of borrowing
Inventory
Goods ready to sell
An asset
Primary source for revenue
Journals
Record transactions
Credits or debits
Date, type, and amount
Payroll
Compensation owed to employees
The list of employees
Major expense
Trial Balance
Debits
Credits
Review Accounts receivable is money owed to a business Accounts payable is money owed by the business Depreciation is the decline in value of assets Trial balance is the balance of all ledgers, usually in the format of two columns