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Introduction to Bookkeeping
It is compulsory for every business to keep records of its business transactions. In order to do this a bookkeeper is needed to assist in recording the financial transactions of the business. This process involves the use of a computerised accounting system or it can be done manually.
Bookkeeping is primarily concerned with:
2. Measuring; and
3. Recording business transactions.
A bookkeeper will ensure that these transactions are accurately recorded in the accounting system.
The main purpose of bookkeeping is for the bookkeeper to record, classify and report information about a business’ financial transactions. The bookkeeper prepares a set of books, namely the accounts, for the business owner. This is normally conducted on a weekly, monthly or quarterly basis depending on the number of transactions along with the size and complexity of the business.
Once up-to-date, these accounts are then passed onto and reviewed by the accountant. The accountant checks them, makes adjustments if necessary, and prepares a set of external financial statements that comply with the Australian accounting standards issued by the Australian Accounting Standards Board. The accountant also prepares the annual income tax return of the business for lodgement with the Australian Taxation Office (ATO).
The overall objective of bookkeeping is to ensure that the financial transactions of the business are accurately recorded and information is presented to the business so that it can make informed economic decisions about the allocation of their resources.
Bookkeepers can also prepare monthly or quarterly Business Activity Statements (BAS). The BAS is then reviewed by the accountant before lodgement with the ATO.
A = L + E
Assets = Liabilities + Equity
This equation is necessary in order to understand the concept of double entry bookkeeping.
The equation means that if an asset is increased then a liability or equity must increase by the same amount so that the equation balances.
The balance sheet reports on:
Assets are future economic benefits owned or controlled by the entity. They include anything owned by the entity that is valuable and contributes to revenue generation, such as cash at the bank, accounts receivable, inventory, land and buildings, and plant and equipment.
Liabilities are amounts owed by the entity to external parties which include bank overdrafts, accounts payable, provision for annual leave and long service leave, tax liabilities and loans payable.
Equity represents the investments made by the owners of the business and the sum of accumulated profits made over the years of operation. When a profit is made, equity increases and vice versa.
Our dedicated team can assist you with all your Bookkeeping needs. Complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.
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The Quinn Group operates Quinn Consultants, Quinn Lawyers, Quinn Financial Planning and Quinn Financial Solutions. The Quinn Group provides related information in regard to legal, accounting and financial planning issues. Liability limited by a scheme approved under Professional Standards Legislation* *other than for the acts or omissions of financial services licensees.