Basic Accounting For Non-Accountants

Learning accounting is a must for everyone in business. It is not enough to rely on an accountant since it is you who will bear the greatest liability in case there is a problem. You must know at least enough to see if there are gross errors in your bookkeeping and financial reports. Furthermore, understanding accounting would enable you to better manage your business.

You do not have to get a college degree in accounting to know enough for your needs. All you need is an understanding of the basics. Some self-study coupled with attending seminars on accounting and bookkeeping should be sufficient to equip you with the necessary know-how.

Be aware, however, that there are many types of seminars on the subject. Some of the seminars are designed for certified public accountants or those with a finance background. There are also some for people who want to be trained to become professional bookkeepers. These are not for you as the discussions would be beyond your comprehension. What would be suitable are those designed for the layman so that it would be easy to understand.

To get you started, here are some of the basic concepts:

Balance Sheet. The balance sheet is where you see the assets, liabilities and owner’s equity (stockholders’ equity if a corporation) of your company at a given point in time. It is like a snapshot of your business.

Income Statement. The income statement shows you the financial performance of your company over an accounting period. Unlike the balance sheet, it is more like a video of a company rather than a snapshot. Here you can find your sales and expenses.

Double entry bookkeeping. In accounting, every company transaction or financial event affects at least two accounts, with one side being a debit and the other a credit. The purpose of this is to serve as an error detection tool. One sign of an error is if the debits do not balance with the credits.

Journal. This is the book of accounts where transactions are first recorded before being posted to the ledger. There are several types of journals.

Ledger. This is where transactions recorded in the journal are posted and summarized by account. Like the journal, there are several types of ledgers.

Accrual basis of accounting. This is the accounting principle which states that sales are recorded when they are earned and expenses when they are incurred. For example, you may not yet have collected payment on your receivables but they are already considered sales when you have already delivered the items or performed the service. An example of recording expenses when they are incurred is depreciation expense. This is already considered an expense even if you have not paid for replacing the item yet.

Categories of assets. There are many types of assets. In accounting, it is important that you know what the major categories of assets are. The most basic difference is between current assets and fixed assets. Current assets are those that can be turned into cash within one year, while fixed assets are those that take more than a year to become cash.

Accounting is not only for accountants. For those in business, it is a basic skill that is as crucial as learning to read or write.

To know more about this, BusinessCoach, Inc., a leading business seminar provider, conducts a seminar entitled, “Bookkeeping and Basic Accounting for Non-Accountants.” Contact (2) 727-5628/8860, (915) 205-0133 or visit www.businesscoachphil.com for details.

Click here to view details of the seminar: Bookkeeping and Basic Accounting for Non-Accountants »

*Originally published by the Manila Bulletin. C-4, Sunday, September 8, 2013. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.