Bookkeeping
Bookkeeping is what pulls all of your business together. This process organizes your transactions historically and is the basis upon which Financial Statements can be produced. This organization of transactions would be for:
Let us handle all of your bookkeeping needs
Current Assets
-
- Current – This would be any assets that can be readily liquidated or turned into cash within a short term.
- Cash and Cash Equivalents – These are basically cash, on hand, in the bank, or anything that can be readily converted to cash such as investments.
- Accounts Receivable – This is money that is owed to you and has been invoiced to your customer.
- Prepaid Assets – These are assets for which you have paid, but have a life span of several months up to a year or are to be expensed at a later time under a year. Accordingly, these are amortized, expensed over those several months to a year.
- Inventory – This would be assets that you have on had that is to be sold or used in production of items to be sold.
- Current – This would be any assets that can be readily liquidated or turned into cash within a short term.
Non-Current Assets
- Non-Current – This would be assets that have a life that is usually greater than a year and therefore cannot be readily converted to cash.
- Fixed Assets – These assets would be Land, Buildings, Furniture & Fixtures, and Leasehold Improvements(these would be improvements that you have made to property that you are leasing that you cannot take with you when the lease ends), etc.
- Accumulated Depreciation – This is commonly referred to as a Contra Asset. Rather than reducing the Fixed Asset when depreciation is taken, which is not acceptable accounting practice, a negative fixed asset is created or added to. Depreciation is expense taken over time that reflects the devaluation of the fixed asset over time (wear and tear).
Liabilities
- Liabilities – These are simply what you owe. There are many types of liabilities.
- Current – This would be any assets that are due within a short term, usually less than a year.
- Accounts Payable – This is money that you have been invoiced and therefore you owe to your vendors.
- Accrued Expenses – This is expenses that have not yet been paid or invoiced but you know will need to be paid at a later time. This is usually added to each month, and reduced when paid.
- Lines of Credit – This is usually revolving (a borrowing that has a fixed maximum amount but can change from day to day) credit. An example would be a credit card.
- Non-current – This would be any liabilities that are due over a period of years.
- Notes Payable – This would be debt that is longer than one year, such as a mortgage.
- Current – This would be any assets that are due within a short term, usually less than a year.
Terms to Know
- Equity – This is what is left after you subtract your Liabilities from your Assets. Another way of putting it, this is your Net Worth.
- Income – This is money that you have earned. This is recognized as income whether you have been paid or not in the period that it was earned.
- Expense – This is money that you have spent. This is recognized as expense whether or not it has been paid in the period that it was earned.
- Net Income (Loss) – This is income less expenses. If positive, it is Net Income. If it is negative it is Net Loss. Either become part of Equity.
- Note*** – Income and expense may need to be further organized by project, product, or service. If done in tis manner, you will be able to readily see what project, product or service is making money and how things can be changed to increase how much it makes.