My favorite class in high school was Bookkeeping. I am pretty sure Intro to Coding has taken it's place now. *Sigh* Oh the simpler times! I can still see the brand new ledger books we were given.
Fresh and clean just waiting for transactions to be recorded.
Doesn't it just make you want to sharpen you pencils?
I believe we were in charge of maintaining the transactions for a Household. Although it wasn't a business we still logged the transactions the same. We had to record the money we received (Income) and then record the money we spent (Expense). Some transactions included people we owed money to (Liability) and sometimes, in exchange for the money we spent, we received something tangible in return (Asset). The difference of all this was our WORTH (Equity).
Working with my clients and unraveling the in's and out's of QuickBooks Online and other accounting software I find it becomes really easy to lose track of the actual transaction. I encourage my clients to go back to the basics, or in accountant-speak, the SOURCE DOCUMENT and answer some simple questions:
- Was it a money in or was it money out? (Income or expense)
- What account was used? (Bank Account, Credit Card, Line of Credit)
- When did the transaction take place? (Last week, today, Not yet!)
By answering these questions you will be able to determine where to go record your transaction. It might not be a ruled ledger with a sharpened pencil, but for me it still feels just as satisfying!
If you are interested in a refresher of Basics click HERE for an easy to understand Glossary!