E-Zee Bookkeeping: "Making Bookkeeping Simple"

Copyright © 2013 by Len Walczak. 503928-WALC

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

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Data-Tech Software Pty Ltd and M.Y.O.B Australia

Limitations of Liability:

While every precaution has been taken in the preparation of this material, the writer cannot anticipate user requirements. For this reason, no warranty is given that the information or advice is appropriate in a particular user environment and no liability is accepted by the writer for any error, omission or reliance upon information or advice.

Rev. date: 07/22/2013

To order additional copies of this book, contact:

Xlibris Corporation

1-800-455-039

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[email protected]

Contents

Forward

Why Do Business Owners

Need Reports?

Who Are the Interested

Parties?

Summary of Accounts Found

in the Accounting Equation of Most Business Structures

Summary of Accounting Rules

Deciphering Debits (Dr’s) and

Credits (Cr’s)

Steps in the Accounting Process

Transactions Journalised

How Do We Record Gst Collected

And Gst Paid?

Steps in Transferring

Transactions to Journal

All Transactions in the Journal

Need to be Posted to the Ledger

A Report called An Unadjusted Trial Balance is Produced from the Ledger.

Producing A Profit and Loss and Balance Sheet

Additional Information

of Importance

Steps In Myob

APPENDIX 1

Forward

Why another accounting book?

Through my teaching over the years in the accounting field at both certificate and diploma levels and my hands on experience in the business world, it was clear that while business owners had a passion for their business and may have excellent people skills, some business owners had little or no accounting skills. There appears to be a limited amount of material available in the marketplace which provided a simple, easy to understand approach to accounting terms and the accounting process.

I seek to overcome this shortfall by leading the reader through a manual system using a practical example and applying the same exercise by using a computer accounting package. My hope is that the reader will obtain a complete understanding by using these simple steps. To quote Lord Macaulay Knowledge advances by steps, not by leaps

I would like to thank my wife Chris for helping me to realize that actions not words is required to complete any project. My daughter Sarah, thanks for teaching the teacher.

The purpose of this publication is to allow people interested in bookkeeping to set up their own business from home using a practical, hands on example to develop their self-confidence.

A good starting point for understanding bookkeeping is to use

the accounting equation:

A = L + E + I – E

(Don’t worry I will explain what each of the letters stand for)

This formula is used to produce a number of reports for business owners as well other interested parties.

Why Do Business Owners

Need Reports?

Business Owners

Need financial information so they can guide their business ventures in the right direction. For example, if a business is continually conducted at a loss, it may have tax advantages but, on the other hand, it could be confronted with expansion problems.

Imagine a business (let’s call it Bob’s Business) running at a loss and the owner (Bob) going to a bank to seek additional funds to expand. In the majority of cases, the application would be rejected because the business would not be able to service the loan (in other words, it would not be able to meet the required repayments).

If the accounting reports of Bob’s Business indicate that sales have decreased while expenses have increased, corrective action would be needed.

Who Are the Interested

Parties?

Interested Parties

Would include:

• The Australian Taxation Office (ATO) which is concerned with collecting the tax that Bob’s Business owes.

• The Union Movement, which would be interested in the financial records of Bob’s Business, in order to seek better pay and working conditions for Bob’s workers/staff.

• Suppliers of goods and services to Bob’s Business (Trade Creditors) would be interested in getting paid for the goods and services provided.

Businesses around Australia can be classified as sole traders (people working for themselves) partnerships or companies.

Sole Traders

Generally speaking, when a decision is made to start a business as a sole trader, the owner is naturally interested in keeping costs as low as possible. The sole trader business structure allows the set up costs to be kept to a minimum. To register as a sole trader, the business person needs to register the business name with the Corporate Affairs Office in their state. It is also necessary to obtain an Australian Business Number (ABN) from the Taxation Department.

A sole trader will take full responsibility for the financial outcome of his/her business. Whether the business makes a profit or a loss is completely under his/her control. It can be a very exciting time, and with good management and control, dreams can