Accounting Tutorial

1. Preparation

  1. Gather Financials
    1. Bank Statements
    2. VISA/MC Statements
    3. Accounts Receivable i.e. Outstanding Invoices
    4. Accounts Payable i.e. Phone Bill
    5. Sales Tax Owing
    6. Cash on Hand

  2. Group the information into categories/Account types explained in next section.

Explaining Account types

Asset Accounts
refer to Cash, Bank, Equipment, Accounts Receivable, etc. They are setup with the most liquid Accounts first i.e. the assets which can be turned into cash the fastest.

Liability Accounts
These accounts represent monies owing to other people, companies. For example, VISA payable, Phone, Taxes, etc.

Capital Accounts
Capital Accounts represent accounts which deal with your investment (and withdrawals) in your company. For example, Owner's Equity or Capital Account, Owner's Withdrawal, Retained Earnings

Income Accounts
Income Accounts may be general or specific. For example, Sales and Misc Sales or Sales - Chairs, Sales - Tables, Sales - Lambs, etc. The specific income accounts allows you to evaluate where sales are being made.

Expense Accounts
These accounts are used to track what is cost you in different categories to 'run' your business.