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Record a Sale Practice Session – Money In Track Your Business Issue sales receipt Record: 1. Record a Sale Practice Session – Money In Money In: Record a Sale Customer buys business cards. Use a credit card / record an expense Remember, the better you understand your cash flow situation, the better you’ll be prepared to make the right business decisions.Ī. Manage Essential Tasks Practice Session: Mark’s Atomic Graphic Designs Money in Record a sale Invoice a customer Receive a payment Make a deposit Money Out E. Income Statement Summarizes the revenue and expenses of a company over a period of time Also called a Profit & Loss or P&L īalance Sheet Shows the assets, liabilities, and equity at a given moment in time Assets = Liabilities + Equity Equity also referred to as Owners Equity or Retained Equity.Ĥ. Make the Most of Your Reports What do you want to know about your sales ? What is selling? Who is buying? Who owes me money? Gain insight into the health of your business with reports: Sales by item Sales by customer Unpaid invoices by customer Reports Understanding Your Business and Decision-Making Use reports as a planning tool Gain insight into your sales Income statement (P&L) shows your profitability Balance sheet shows assets, liabilities and equity Regularly monitor your profitability – and your cash flow Reports help you understand how your business is doing
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Choose one specific to your industry, and make minor changes if needed.ģ. Major Account Types Assets Current (cash, inventory, accounts receivable, etc.) Fixed (property, vehicles, machinery, etc.) Liabilities Current (within one year) Long Term Equity Contributed capital: owner’s investment Retained earnings (profits) Assets = Liabilities + Equity Everything your business possesses Everything your business has borrowed Everything your business ownsĬategorize Your Transactions With a Chart of Accounts Chart of Accounts Master account lists – a chart of accounts – are used to sort your transactions into categories Each account category contains sub-accounts Ĭhart of Accounts: Your Master List of Accounts and Sub-Accounts NAME TYPE NAME TYPE INCOME ASSET Sales Income Checking Bank Other income Other income Accounts Receivable Accounts Receivable EXPENSE Undeposited funds Other Current Asset Advertising Expense Equipment Asset Car and Truck Expenses Expense LIABILITY Contract labor / payroll Expense Loans Liability Cost of goods sold Expense Sales Tax Payable Other Current Liability Entertainment / meals Expense EQUITY Office expenses Expense Contributed Capital Equity Repairs and maintenance Expense (Owner’s invested funds) Supplies Expense Retained Earnings Equity Taxes and licenses Expense (Business’ profits) Utilities Expense Other expenses Other expensesĪccounts: What We’ve Learned Consolidate your record keeping Use a standard set of accounts or categories to “file away” transactions-there is a common language Keep it simple: Significant accounts only Use Industry Specific Accounts Master account lists – a chart of accounts – are readily available for most types of business. Financial Accounts Why They Matter to Your Business Accurate record keeping lets you understand and use all your information Money in from payments received Data on customers and vendors Record of your bank accounts Money out for checks written, refunds and other expenses Ĭash Flow: Money In and Money Out YOUR BUSINESS Money In Money Out CUSTOMERS Sales Services / Products Out VENDORS Expenses Services / Products In Information is Power What do you want to know about your business ? How much money am I bringing in? How much am I spending? Is my business making any money? What’s the value of what my business owns? How much does my business owe to others? What is my business worth? Sales Expenses Sales – Expenses Assets Liabilities EquityĢ. Apply for and establish credit with your vendors. Know and understand your customers through consolidated records. Track the money going in and out of your business. To be considered for a loan or investment, you’ll need complete financial statements. Make informed decisions – and price your product or service for profitability – with financial reports 6. Report your company’s incomes, expenses, and payroll accurately to the IRS. Six Ways Financial Management Helps Your Business Succeed 4. What is Financial Management? Process of: Running your business Recording money coming in and out Using reports to : Understand how your business is doing Make decisions Introduction to Financial Management Why Accounts are Important Using Reports Managing Essential Tasks: Practice Session Tips and Resources Appendix: Additional Concepts & Terms Financial Management Essentialsġ. A Simple Start to Managing Your Business Finances A Guide to the Essentials QB_10/2004_01