Hello,
I run a small business of around 4 to 5 employees. We lack proper accounting knowledge. I really would like to create some structure in how we do our book-keeping.
Currently its a mess and I am trying to structure the book-keeping correctly. As far as I have read its mostly about how money moves in and out of the company with proper structure.
Our out-sourced accountant is really a pain to deal with so I am only left to post my concerns here.
Below is the structure I intend to use for my ledger. Also some transaction examples I am trying to write up. Need advise if I am doing it correctly.
Note: If I pay a deposit to a supplier which accounts does this affect? Could someone explain me here?
Appreciate any help that you could provide me here.
Balance Sheet
-- Assets : Cash, Account Receivables, Supplies, Equipment
--Liability : Notes Payable, Account Payable, Wage Payable,Unearned_Revenue
--Equity : Common Stock, Retained Earnings,
Income Statement
--Revenue : Service Revenue , Investment Revenue
--Expenses : Wage Expenses, Rent, Depreciation Expenses etc.
TRANSACTION 1
Dec 1 2014 - Joe starts his business by making a personal investment of $20,000 in in his firm in exchange for 5,000.00 common stock.
Cash account is increased from 0 to $20,000.00
Also there is an increase stock holders equity account of Common Stock to $20,000.00.
Assets:Cash $20,000.00
Equity:Common Stock $-20,000.00
TRANSACTION 2
Joe purchases a a vehicle using cash by writing a cheque of $14,000.00
2 accounts involved here are Cash and Vehicle
Assets:Cash $-14,000.00
Assets:Vehicle $14,000.00
TRANSACTION 3
Joe contacts an insurance agent regarding insurance coverage.
The agent informs $1,200.00 will provide insurance for 6 months(each month $200).
Assets:Cash $-1,2000.00
Assets: Prepaid_Insurance $1,200.00
Each month it will go as follows:-
Assets: Prepaid_Insurance $-200.00
Expenses:Insurance $200.00
TRANSACTION 4
Customer pays Joe $10 for 2 deliveries for that day against invoice#001.
Assets:Cash $10.00
Revenue:Service_Revenue:Sales:Invoice#001 $-10.00
TRANSACTION 5
Lets say Joe gets a big order and needs to deliver 50 parcels immediately for $250. He hires a helper to deliver the parcel. The customer tells Joe to submit an invoice of $250.00 and he will pay it in 7 days.
Since Joe delivers 50 parcels, he has earned $250.00
Assets:Account_Receivables:Invoice#002 $250.00
Revenue:Service_Revenue:Inv#002 $-250.00
TRANSACTION 6
For sake of simplicity Lets say the only expense was the Temporary Helper.
The temporary helper fee is $80 and is due by Dec 2nd.
Expenses:Temporary_Helper $80.00
Liability:Account_Payable:Helper:Inv#003 $-80.00
I run a small business of around 4 to 5 employees. We lack proper accounting knowledge. I really would like to create some structure in how we do our book-keeping.
Currently its a mess and I am trying to structure the book-keeping correctly. As far as I have read its mostly about how money moves in and out of the company with proper structure.
Our out-sourced accountant is really a pain to deal with so I am only left to post my concerns here.
Below is the structure I intend to use for my ledger. Also some transaction examples I am trying to write up. Need advise if I am doing it correctly.
Note: If I pay a deposit to a supplier which accounts does this affect? Could someone explain me here?
Appreciate any help that you could provide me here.
Balance Sheet
-- Assets : Cash, Account Receivables, Supplies, Equipment
--Liability : Notes Payable, Account Payable, Wage Payable,Unearned_Revenue
--Equity : Common Stock, Retained Earnings,
Income Statement
--Revenue : Service Revenue , Investment Revenue
--Expenses : Wage Expenses, Rent, Depreciation Expenses etc.
TRANSACTION 1
Dec 1 2014 - Joe starts his business by making a personal investment of $20,000 in in his firm in exchange for 5,000.00 common stock.
Cash account is increased from 0 to $20,000.00
Also there is an increase stock holders equity account of Common Stock to $20,000.00.
Assets:Cash $20,000.00
Equity:Common Stock $-20,000.00
TRANSACTION 2
Joe purchases a a vehicle using cash by writing a cheque of $14,000.00
2 accounts involved here are Cash and Vehicle
Assets:Cash $-14,000.00
Assets:Vehicle $14,000.00
TRANSACTION 3
Joe contacts an insurance agent regarding insurance coverage.
The agent informs $1,200.00 will provide insurance for 6 months(each month $200).
Assets:Cash $-1,2000.00
Assets: Prepaid_Insurance $1,200.00
Each month it will go as follows:-
Assets: Prepaid_Insurance $-200.00
Expenses:Insurance $200.00
TRANSACTION 4
Customer pays Joe $10 for 2 deliveries for that day against invoice#001.
Assets:Cash $10.00
Revenue:Service_Revenue:Sales:Invoice#001 $-10.00
TRANSACTION 5
Lets say Joe gets a big order and needs to deliver 50 parcels immediately for $250. He hires a helper to deliver the parcel. The customer tells Joe to submit an invoice of $250.00 and he will pay it in 7 days.
Since Joe delivers 50 parcels, he has earned $250.00
Assets:Account_Receivables:Invoice#002 $250.00
Revenue:Service_Revenue:Inv#002 $-250.00
TRANSACTION 6
For sake of simplicity Lets say the only expense was the Temporary Helper.
The temporary helper fee is $80 and is due by Dec 2nd.
Expenses:Temporary_Helper $80.00
Liability:Account_Payable:Helper:Inv#003 $-80.00
