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Importance ofBookkeeping in Your Business Presented by: Efferson P. Ramirez Senior Auditor
Introduction to Accounting andBookkeeping Traditionally, Accounting isdefined as the art of recording,classifying and summarizing in asignificant manner and in termsof money, transactions andevents which in part at least of afinancial character andinterpreting the results thereof.
Basic Definition of AccountingAs to Function: Accounting is a serviceactivity. It provides quantitativeinformation primarily financialin nature, about economicentities that is intended to beuseful in making economicdecision.
Basic Definition of AccountingAs to Purpose: Accounting is the processof identifying, measuring andcommunicating economicinformation to permitinformed judgment anddecision by users ofinformation.
Accounting versus BookkeepingBookkeeping can beconsidered as aprocedural/mechanical/technical element ofaccounting. It is thesystematic andchronological recordingof transactions andevents. Developmentand maintenance ofrecord are also itsconcern.
Importance of BookkeepingBookkeepingwill provide ???presentanswers tobasic questionsin your smallbusiness suchas:
Importance of BookkeepingEvaluatewhetheryourresourcesareincreasing,
Importance of BookkeepingOr areyouincurringliabilities?
Importance of BookkeepingAre youimproving yourEquity Standing?It is the residualinterest of theowner/s in theassets of theentity afterdeducting its totalliabilities.
Importance of BookkeepingAre youearning atleast fairrevenues?
Importance of BookkeepingOr you arepaying too CAS HV OU Cmuch H ER P ay ee : JHA MM INGexpenses? Sup S plie s P5,0 00. 0 0
Importance of BookkeepingBookkeepingwill provide ????answers tobasicquestions inyour businessevaluation andplanning:
Importance of Bookkeeping• Where are you now?• Where do you need to be?
Importance of Bookkeeping So a well maintained bookkeeping system will enable you for balancedBudgeting or Financial Planning as a means of working to quantify your Vision, Mission, Goals and Objectives
So Proper Bookkeeping will provide you correct: OBJECTIVES AND STRATEGIES
PRACTICINGCORRECTBOOKKEEPINGWHICH IS THE KEYTO FINANCIALPLANNING SHALLLEAD YOU TOCORRECT PATHTOWARDS SUCCESSIF PAIRED WITHREGULAR REVIEWPROCESSES.
What are the components of a goodbookkeeping system?2.Source Documents such as OfficialReceipts, Cash Vouchers and Others3.Books of Accounts such as CashReceipt Book, Cash DisbursementBook, General Journal, GeneralLedgers and Others4.Subsidiary Ledgers andSchedules5.Financial Statements as Endproducts.
THE GENERAL ACCOUNTING SYSTEM Cash Receipts Cash disbursements Non-Cash Transactions Credit Transactions Cash/Check Purchase Invoice Official Journal VouchersSource Documents Disbursement & Sales Invoice Receipt (JV) Vouchers (CDV) Cash Other Cash Receipt Disbursement General Journal (GJ) Journals (PJ,Books of Original Journal (CRJ) Journal (CDJ) SJ) EntryBook of Final Entry General Ledger Subsidiary Financial Ledgers Statements
SAMPLE CASH RECEIPT BOOKDATE PARTICULARS REF CASH IN SERVICE (DR.) REVENUE (CR.)
SAMPLE CASH DISBURSEMENT BOOKDAT PARTICULARS RE CASH TRANSPORTATIO RENT SUPPLIES E F OUT N (DR.) (DR.) (DR.) (CR.)
Marys Massage Service Balance Sheet As of January 31, 2011 ASSETSCURRENT ASSETS Cash 12,000.00 Accounts Receivable 5,000.00 Supplies 2,000.00 TOTAL CURRENT ASSETS 19,000.00NON-CURRENT ASSETS Office Equipment 12,000.00 Building Improvement 20,000.00TOTAL NON-CURRENT ASSETS 32,000.00TOTAL ASSETS 51,000.00 LIABILITIES AND CAPITALLIABILITIES Accounts Payable 12,000.00 Unearned Revenues 3,000.00TOTAL LIABILITIES 15,000.00CAPITAL Mary Smith, Capital 36,000.00TOTAL LIABILITIES AND 51,000.00CAPITAL
Marys Massage Service Income Statement For the Month Ended January 31, 2011REVENUES Service Revenue 36,100.00LESS EXPENSES Salaries Expense 3,000.00 Transportation Expense 500.00 Supplies Expense 3,000.00 Rent Expense 2,500.00 Utilities Expense 300.00 Telephone Expense 200.00 Advertising Expense 100.00 Total Expenses 9,600.00NET INCOME 26,500.00
So…..A proper accounting or bookkeepingsystem is essential to any businesswhether big or small in order tomanage its daily functions and keepthe business running successfully. Forany successful business, the mainobligation is to maximize profits,minimize any loss and at the sametime maintain its position as aresponsible person or entity within thesociety. Let us hear from you if wecould be of help in your bookkeepingneeds!