Learn to do your own Accounts
- Do your own bookkeeping
- Expand your work skills
- Improve your employ-ability
- Start your own small business as a bookkeeper.
There are 13 lessons in this course:
Introduction - Nature, Scope and Function of Bookkeeping
The Balance Sheet
Analysing and Designing Accounting Systems
Double Entry Bookkeeping
Cash Receipts and Cash Payment Journals
Credit Sales, Fees and Purchases Journal
The General Journal
The Closing of the General Ledger
Profit and Loss Statements
Depreciation on Non-current Assets
Profit Determination and Balance Day Adjustments
Cash Control: Bank Reconciliation and Petty Cash
Cash Control: Budgeting
Each lesson culminates in an assignment which is submitted to the school, marked by the school's tutors and returned to you with any relevant suggestions, comments, and if necessary, extra reading.
WHY IS BOOKKEEPING NECESSARY
There are legal reasons for bookkeeping. Most developed countries require accounting records to be kept; and taxation to be paid based upon those records. There are other reasons as well though. Bookkeeping is an important tool for any business, that enables better management of resources. It records and tracks money received and money spent (or lost). This in turn allows you to identify earnings and losses; and ultimately produce assessments of what is happening such as profit and loss.
THE PROFIT AND LOSS STATEMENT
The Profit and Loss statement is also called a Statement of Financial Performance. Profit occurs when income over a given period is greater than expenses. Loss will occur if expenses are greater than income. Income can be regarded as any proceeds from the sale of goods or services offered by the business. Other forms of income can include, interest paid on bank accounts, interest derived through money investment in stocks (as dividends), donations, etc.
Expenses are all payments made in conjunction with the production of the income. Such things may include labour, rates, rent, power, licences, registrations, raw material costs, advertising, etc.
The Balance Sheet and how it relates to the Profit and Loss Statement
As we learnt in earlier lesson the accounting system is based on 5 basic account types:
The first three above are the balance sheet accounts (they do not appear on profit and loss statements) the last two, income and expense account are profit and loss accounts. The balance between the income and expenses (the net profit) is the figure transferred from the profit and loss account to the balance sheet as owner’s equity, at the end of the accounting period.
Every time income is received, the owner’s equity is increased. Every expense decreases owner’s equity. If a profit is achieved over a given period, the owner’s equity is increased (in other words the owner has made a profit). This occurs through the transfer of net profit figure to the owner’s equity section of the balance sheet.
A new equation could then be suggested:
Assets = liabilities + original owner’s equity + profit (– loss)
Or this could be described as:
Assets = liabilities + original owner’s equity + (income - expense)
In order for a profit and loss statement to be meaningful to the reader, the period for which the profit or loss is calculated must be clearly shown on the statement. If a business makes a profit for example of $10,000, the reader may surmise that this is not a good return on investment - if they think that the profit was for a full year. However if this profit related to a single accounting period of say a month - then the reader would gain a quite different perspective of the business’s performance. So a profit and loss statement must be clear and easily read and understood.
This course teaches you all of the fundamental tasks that a bookkeeper undertakes in anything but exceptional or very large enterprises.