It is compulsory for every business to keep records of its business transactions. In order to do this a bookkeeper is needed to assist in recording the financial transactions of the business. This process involves the use of a computerised accounting system or it can be done manually.
Bookkeeping is primarily concerned with:
1. Identifying;
2. Measuring; and
3. Recording business transactions.
A bookkeeper will ensure that these transactions are accurately recorded in the accounting system.
The main purpose of bookkeeping is for the bookkeeper to record, classify and report information about a business’ financial transactions. The bookkeeper prepares a set of books, namely the accounts, for the business owner. This is normally conducted on a weekly, monthly or quarterly basis depending on the number of transactions along with the size and complexity of the business.
Once up-to-date, these accounts are then passed onto and reviewed by the accountant. The accountant checks them, makes adjustments if necessary, and prepares a set of external financial statements that comply with the Australian accounting standards issued by the Australian Accounting Standards Board. The accountant also prepares the annual income tax return of the business for lodgement with the Australian Taxation Office (ATO) (if he is a registered Tax Agent).
Accounts Payable (also known as Trade Creditors)
The accounts payable account is used to record the bills of a business that are outstanding.
Accounts Receivable (also known as Trade Debtors)
Accounts receivable, are the amounts owed to an entity by its clients. An account receivable comes about when goods or services are sold to clients on the basis of credit. Under the credit system, a client is given a certain time frame in which the account has to be paid.
Chart of Accounts
The chart of accounts is the foundation of the bookkeeping system. A structure that shows how a company categorises the money they receive, spend and to show the interested entities how healthy the company is financially.
Balance Sheet
The balance sheet is a report that provides a summary of the financial position of a business on any given date. It will indicate the value of your company’s assets, liabilities, and equity.
Profit and Loss Statement
The profit and loss statement (or income statement) shows the profit or loss and individual performance for the period. It is usually headed “for the year ended…”. Up until 30 June 2005, the profit and loss statement was also referred to as the statement of financial performance. The profit and loss statement includes:
• Revenues, and
• Expenses of the business for the relevant period.
The difference between revenues and expenses is referred to as the net profit / (loss). Some organisations, particularly non-profit organisations, refer to this figure as the net surplus/(deficit).
Here at The Quinn Group our experienced team of Accountants and Bookkeepers can help you with your back office processing or any other Accounting related issues. Contact us by submitting an online enquiry form or call 1300 QUINNS or on +61 2 9223 9166.
