Bookkeeping For Dummies, UK Edition E-Book

Jane E. Kelly

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 442

Veröffentlichungsjahr: 2016

Beschreibung

Britain's number-one guide to mastering the art and science of bookkeeping

Accurate bookkeeping is crucial to the success of every business—but few people relish in this highly detailed task. Luckily, this new edition of Bookkeeping For Dummies simplifies every aspect of financial record keeping, walking you through the basic skills you need to make numbers your minion. From tracking transactions and keeping ledgers to producing balance sheets and year-end reports, this straight-talking guide takes the intimidation out of bookkeeping and shows you how to make it your best friend in business.

Fully updated to include the latest coverage of accounting practices and bookkeeping software, this new edition of Bookkeeping For Dummies features tons of practical exercises to get you up and running with what you need to keep your books balanced, your finances in order and the tax inspector off your back.

• Find updated bookkeeping templates and resources available via download
• Manage day-to-day records like sales and purchases
• Produce Profit and Loss Statements and Balance Sheets
• Prepare year-end documents with confidence and ease

From the importance of keeping a paper trail to the best ways to keep payroll rolling—and everything in between—this is the ideal resource for anyone looking to learn the bookkeeping ropes.

Leseprobe

Bookkeeping For Dummies®, 4th Edition

Published by: John Wiley & Sons, Ltd., The Atrium, Southern Gate, Chichester,www.wiley.com

This edition first published 2016

© 2016 by John Wiley & Sons, Ltd., Chichester, West Sussex

Media and software compilation copyright © 2016 by John Wiley & Sons, Ltd. All rights reserved.

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ISBN 978-1-119-18913-8 (pbk); ISBN 978-1-119-18912-1 (ebk); ISBN 978-1-119-18914-5 (ebk)

Bookkeeping For Dummies®

Visit www.dummies.com/cheatsheet/bookkeepinguk to view this book's cheat sheet.

Table of Contents

Cover

Introduction

About This Book

Foolish Assumptions

Icons Used in This Book

Beyond the Book

Where to Go from Here

Part I: Basic Bookkeeping: Why You Need It

Chapter 1: So You Want to Do the Books

Delving into Bookkeeping Basics

Defining and Maintaining a Ledger

Using Bookkeeping Tools to Manage Daily Finances

Running Tests for Accuracy

Chapter 2: Getting Down to Bookkeeping Basics

Bookkeeping: The Record-Keeping of the Business World

Wading through Basic Bookkeeping Lingo

Pedalling through the Accounting Cycle

Understanding Accounting Methods

Seeing Double with Double-Entry Bookkeeping

Have a Go

Answering the Have a Go Questions

Chapter 3: Outlining Your Financial Roadmap with a Chart of Accounts

Getting to Know the Chart of Accounts

Starting with the Balance Sheet Accounts

Keeping an Eye on the Profit and Loss Statement Accounts

Setting Up Your Chart of Accounts

Have a Go

Answering the Have a Go Questions

Chapter 4: Looking at Ledgers

Developing Entries for the Ledger

Posting Sales Invoices

Posting Purchase Invoices

Entering Items into the Nominal Ledger

Making Cashbook Transactions

Introducing Control Accounts

Understanding How the Ledgers Impact the Accounts

Adjusting for Nominal Ledger Errors

Have a Go

Answering the Have a Go Questions

Chapter 5: Discovering Different Business Types

Finding the Right Business Type

Tax Reporting for Sole Traders

Filing Tax Forms for Partnerships

Paying Taxes for Limited Companies

Have a Go

Answering the Have a Go Questions

Part II: Recording Day-to-Day Business Operations

Chapter 6: Planning and Controlling Your Workload

Introducing Checklists

Sorting Out Your Sales Invoices

Entering Your Purchase Invoices

Checking Cash Payments and Receipts

Reconciling Your Bank Account

Entering Your Journals

Controlling Your Books, Records and Money

Have a Go

Answering the Have a Go Questions

Chapter 7: Counting Your Sales

Collecting on Cash Sales

Selling on Credit

Cashing Up the Cash Register

Monitoring Sales Discounts

Recording Sales Returns and Allowances

Monitoring Trade Debtors

Accepting Your Losses

Have a Go

Answering the Have a Go Questions

Chapter 8: Buying and Tracking Your Purchases

Keeping Track of Stock

Buying and Monitoring Supplies

Staying on Top of Your Bills

Have a Go

Answering the Have a Go Questions

Chapter 9: Doing Your Banking

Making Sure that the Closing Cash Is Right

Reconciling Bank Accounts

Have a Go

Answering the Have a Go Questions

Part III: Preparing the Books for Year- (or Month-) End

Chapter 10: Adjusting Your Books

Adjusting All the Right Areas

Checking Your Trial Balance

Changing Your Chart of Accounts

Have a Go

Answering the Have a Go Questions

Chapter 11: Depreciating Your Assets

Defining Depreciation

Depreciating the Value of Assets

Tackling Taxes and Depreciation

Setting Up Depreciation Schedules

Recording Depreciation Expenses

Have a Go

Answering the Have a Go Questions

Chapter 12: Adding the Cost of Value Added Tax (VAT)

Looking into VAT

Registering for VAT

Paying In and Reclaiming VAT

Completing Your VAT Return

Pursuing Payments and Repayments

Part IV: Reporting Results and Starting Over

Chapter 13: Producing a Profit and Loss Statement

Lining Up the Profit and Loss Statement

Formatting the Profit and Loss Statement

Preparing the Profit and Loss Statement

Deciphering Gross Profit

Monitoring Expenses

Using the Profit and Loss Statement to Make Business Decisions

Testing Profits

Branching Out with Profit and Loss Statement Data

Have a Go

Answering the Have a Go Questions

Chapter 14: Developing a Balance Sheet

Breaking Down the Balance Sheet

Gathering Balance Sheet Ingredients

Pulling Together the Final Balance Sheet

Putting Your Balance Sheet to Work

Have a Go

Answers to Have a Go Questions

Chapter 15: Reporting for Not-For-Profit Organisations

Keeping Only Receipts and Payments Accounts

Tallying Income and Expenditure Accounts

Have a Go

Answering the Have a Go Questions

Chapter 16: Preparing Your Year-End Accounts

Finalising the Nominal Ledger

Conducting Special Year-End Bookkeeping Tasks

Starting the Cycle Anew

Part V: Payroll Preparation and Online Accounts Tools

Chapter 17: Employee Payroll and Benefits

Staffing Your Business

Providing Real Time Information

Collecting Employee Taxes

Determining Net Pay

Taxing Benefits

Preparing and Posting Payroll

Settling Up with HM Revenue & Customs

Handling Payroll Year-End

Have a Go

Answering the Have a Go Questions

Chapter 18: Cloud Accounting: The Modern Approach to Bookkeeping

Defining Cloud Accounting

Understanding the Benefits of Cloud Accounting

Checking Out Concerns Surrounding Cloud Accounting

Selecting an Online Package

Part VI: The Part of Tens

Chapter 19: Top Ten Ways to Manage Your Business Cash with Your Books

Charting the Way

Balancing Your Entries

Posting Your Transactions

Keeping on Top of Credit Control

Paying Bills Accurately and On Time

Planning Profits

Comparing Budget to Actual Expenses

Comparing Sales Goals to Actual Sales

Monitoring Cost Trends

Making Pricing Decisions

Chapter 20: Top Ten Most Important Accounts for Any Bookkeeper

Cash

Trade Debtors (Accounts Receivable)

Stock (Inventory)

Trade Creditors (Accounts Payable)

Loans Payable

Sales

Purchases

Payroll Expenses

Office Expenses

Retained Earnings

Appendix: Glossary

About the Authors

Cheat Sheet

Advertisement Page

Connect with Dummies

End User License Agreement

Guide

Cover

Table of Contents

Begin Reading

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Introduction

Bookkeepers manage all the financial data for small businesses. If you subscribe to the idea that information is power (and we do), you can see that the bookkeeper has a tremendous amount of power within a business. Information recorded in the books helps business owners make key decisions involving sales planning and product offerings, as well as manage many other financial aspects of their businesses.

Without the hard work of bookkeepers, businesses wouldn’t have a clue about what’s happening with their financial transactions. Without accurate financial bookkeeping, a business owner can’t know how many sales are being made, how much cash is being collected or how much cash was paid for the products sold to customers during the year. The owner also can’t know how much cash was paid to employees or spent on other business needs throughout the year.

Accurate and complete financial bookkeeping is crucial to any business owner, and also important to those who work with the business, such as investors, financial institutions and employees. People inside (managers, owners and employees) and outside the business (investors, lenders and HM Revenue & Customs – HMRC) depend on the bookkeeper’s accurate recording of financial transactions.

Yes, the bookkeeper’s job is crucial and requires certain skills and talents. Bookkeepers must be detail-orientated, enjoy working with numbers and be meticulous about accurately entering those numbers in the books. They must be vigilant about keeping a paper trail and filing all needed backup information about the financial transactions entered into the books.

About This Book

In this book, we introduce you to the key aspects of bookkeeping and how to set up and use your financial books. We walk you through the basics of bookkeeping, starting with the process of setting up your business’s books and developing:

A list of your business’s accounts, called the Chart of Accounts.

Your business’s Nominal Ledger, which summarises all the activity in a business’s accounts.

We also discuss your Sales and Purchase ledgers, as well as the Cashbook where all your financial transactions are posted.

Then we take you through the process of recording those transactions – sales, purchases and other financial activity. We also talk about how to manage payroll, HMRC reporting and external financial reporting.

We then discuss the procedures at year-end and what bookkeeping tasks need to be done to prepare your year-end accounts. Bookkeeping is a continuous cycle, starting with financial transactions, recording those transactions in ledgers, posting those transactions to the Nominal Ledger, testing your books to be sure that they’re in balance, making any necessary adjustments or corrections to the books to keep them in balance, preparing financial reports to understand how well the business did during the year and finally getting ready to start the process all over again for the next year.

We have added a new chapter in this edition, where we talk about cloud accounting, which is one of the modern ways that small businesses can carry out their bookkeeping online. Take a look at Chapter 18 for more information about this fast-growing industry.

Throughout this book, we introduce ‘Have a Go’ sections, which are practical exercises aimed at helping you understand the bookkeeping principles we discuss. Feel free to draw all over these sections of the book; we want it to be as useful for you as possible.

We also include a number of examples on how to apply the basics of bookkeeping to real-life situations. If you’re primarily reading this book to gain a general knowledge of the subject and don’t need to delve into all the nitty-gritty day-to-day aspects of bookkeeping, you may want to skip over the paragraphs marked with the Example icon. Skipping the examples doesn’t interfere with your grasp of the key aspects of how to keep the books. You’re also free to skip anything in a sidebar (a shaded box) or marked with the Technical Stuff icon; those pieces of text are interesting but not crucial to your understanding of bookkeeping.

Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending that the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy – just click the web address to be taken directly to the web page.

Foolish Assumptions

While writing this book, we made some key assumptions about who you are and why you’ve picked up this book to get a better understanding of bookkeeping. We assume that you’re one of the following:

A business owner who wants to know how to do your own books. You have a good understanding of business and its terminology but have little or no knowledge of bookkeeping and accounting.

A person who does, or plans to do, bookkeeping for a small business and needs to know more about how to set up and keep the books. You have some basic knowledge of business terminology but don’t know much about bookkeeping or accounting.

A member of staff in a small business who’s been asked to take over the bookkeeping duties. You need to know more about how transactions are entered into the books, how to check transactions to be sure that you’re making entries correctly and accurately and how to prepare financial reports using the data you collect.

Icons Used in This Book

For Dummies books use little pictures, called icons, to flag certain chunks of text. The icons in Bookkeeping For Dummies are:

Look to this icon for ideas on how to improve your bookkeeping processes and manage your business accounts.

This icon marks anything we really, really want you to recall about bookkeeping after you’ve finished reading this book.

This icon points out any aspect of bookkeeping that comes with pitfalls or hidden dangers. We also use this icon to mark anything that can get you into trouble with HMRC, your bank, your suppliers, your employees or your investors.

The Example icon gives real-life specifics on how to do a particular bookkeeping function.

This icon highlights paragraphs that are a bit more technical than the rest of the book. This information can be handy, but you can skip over it without missing anything essential.

Beyond the Book

If you fancy finding out a bit more about the world of bookkeeping, you can read some of our online articles, which you can find at www.dummies.com/extras/bookkeepinguk.

We offer you a few hints and tips on how to become more organised in your bookkeeping role. We also give you the lowdown on accruals and prepayments, and provide some examples of the types of situations in which you need to use them. In addition, we show you how your Balance Sheet can help you understand more about the financial health of your business. We bring the bookkeeping world up to date by talking about cloud accounting and what questions you need to ask yourself before making the decision about which online accounting software to use. Finally, we also look at ten different ways to improve your credit control. Effective credit control means that you’re bringing cash into the business in an efficient manner, and because cash is so important for a business, you might find this article an interesting read.

You might also want to check our Cheat Sheet online (at www.dummies.com/cheatsheet/bookkeepinguk), where we look at all manner of bookkeeping tips and techniques, from key steps to the bookkeeping process, tips for controlling the business cash, when to use debits and credits, as well as some important ratios that might be useful when analysing the Balance Sheet of a company.

Where to Go from Here

You’re now ready to enter the world of bookkeeping, and Bookkeeping For Dummies is set up so that you can start anywhere you like!

If you need the basics or are a little rusty and want to refresh your knowledge of bookkeeping, start with Part I. However, if you already know bookkeeping basics, are familiar with the key terminology and know how to set up a Chart of Accounts, consider diving in at Part II.

If you’ve set up your books already and feel comfortable with the basics of bookkeeping, you may want to start with Part III and how to enter various transactions. On the other hand, if your priority is using the financial information you’ve already collected, check out the financial reporting options in Part IV. Have fun!

Part I

Basic Bookkeeping: Why You Need It

Find more about bookkeeping and other topics for free at www.dummies.com.

In this part …

Discover why bookkeeping is so important, and get started with the task of setting up your books.

Become familiar with bookkeeping jargon, such as ledger, journal, posting, debit and credit.

Find out about the all-important Chart of Accounts and how you can set this up to customise your business accounts.

Look at different business types and understand why it’s important to set up the correct one.

Chapter 1

So You Want to Do the Books

In This Chapter

Introducing bookkeeping and its basic purpose

Maintaining a paper trail

Managing daily business finances

Making sure that everything’s accurate

Many small business owners, while they enjoy working in their chosen field using the skills they know and love, don’t always like to perform ‘bookkeeping’ duties. Most company owners prefer to employ the skills of a qualified bookkeeper. Some may, perhaps, prefer to give their bagfuls of receipts to their accountant and simply hope that a useful set of accounts comes out of the end of the accounting sausage machine!

In this chapter, we help to demystify the role of a bookkeeper. It may be that you’re just starting off in business and, as a result, can’t afford the services of a bookkeeper just yet! Think of this chapter as a checklist of jobs that need to be done.

Delving into Bookkeeping Basics

Like most businesspeople, you probably have great ideas for running your own business and just want to get started. You don’t want to be distracted by the small stuff, like keeping detailed records of every penny you spend; you just want to build a business with which you can make lots of money.