Jane E. Kelly - Bookkeeping for Dummies: 4th UK Edition

Bookkeeping For Dummies, 4th Edition

Published by: John Wiley & Sons, Ltd., The Atrium, Southern Gate, Chichester,www.wiley.com

This edition first published 2016

2016 by John Wiley & Sons, Ltd., Chichester, West Sussex

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ISBN 978-1-119-18913-8 (pbk); ISBN 978-1-119-18912-1 (ebk); ISBN 978-1-119-18914-5 (ebk)

1. Table of Contents

Bookkeepers manage all the financial data for small businesses. If you subscribe to the idea that information is power (and we do), you can see that the bookkeeper has a tremendous amount of power within a business. Information recorded in the books helps business owners make key decisions involving sales planning and product offerings, as well as manage many other financial aspects of their businesses.

Without the hard work of bookkeepers, businesses wouldnt have a clue about whats happening with their financial transactions. Without accurate financial bookkeeping, a business owner cant know how many sales are being made, how much cash is being collected or how much cash was paid for the products sold to customers during the year. The owner also cant know how much cash was paid to employees or spent on other business needs throughout the year.

Accurate and complete financial bookkeeping is crucial to any business owner, and also important to those who work with the business, such as investors, financial institutions and employees. People inside (managers, owners and employees) and outside the business (investors, lenders and HM Revenue & Customs HMRC) depend on the bookkeepers accurate recording of financial transactions.

Yes, the bookkeepers job is crucial and requires certain skills and talents. Bookkeepers must be detail-orientated, enjoy working with numbers and be meticulous about accurately entering those numbers in the books. They must be vigilant about keeping a paper trail and filing all needed backup information about the financial transactions entered into the books.

In this book, we introduce you to the key aspects of bookkeeping and how to set up and use your financial books. We walk you through the basics of bookkeeping, starting with the process of setting up your businesss books and developing:

• A list of your businesss accounts, called the Chart of Accounts.
• Your businesss Nominal Ledger, which summarises all the activity in a businesss accounts.
• We also discuss your Sales and Purchase ledgers, as well as the Cashbook where all your financial transactions are posted.

Then we take you through the process of recording those transactions sales, purchases and other financial activity. We also talk about how to manage payroll, HMRC reporting and external financial reporting.

We then discuss the procedures at year-end and what bookkeeping tasks need to be done to prepare your year-end accounts. Bookkeeping is a continuous cycle, starting with financial transactions, recording those transactions in ledgers, posting those transactions to the Nominal Ledger, testing your books to be sure that theyre in balance, making any necessary adjustments or corrections to the books to keep them in balance, preparing financial reports to understand how well the business did during the year and finally getting ready to start the process all over again for the next year.

We have added a new chapter in this edition, where we talk about cloud accounting, which is one of the modern ways that small businesses can carry out their bookkeeping online. Take a look at for more information about this fast-growing industry.

Throughout this book, we introduce Have a Go sections, which are practical exercises aimed at helping you understand the bookkeeping principles we discuss. Feel free to draw all over these sections of the book; we want it to be as useful for you as possible.

We also include a number of examples on how to apply the basics of bookkeeping to real-life situations. If youre primarily reading this book to gain a general knowledge of the subject and dont need to delve into all the nitty-gritty day-to-day aspects of bookkeeping, you may want to skip over the paragraphs marked with the Example icon. Skipping the examples doesnt interfere with your grasp of the key aspects of how to keep the books. Youre also free to skip anything in a sidebar (a shaded box) or marked with the Technical Stuff icon; those pieces of text are interesting but not crucial to your understanding of bookkeeping.

Within this book, you may note that some web addresses break across two lines of text. If youre reading this book in print and want to visit one of these web pages, simply key in the web address exactly as its noted in the text, pretending that the line break doesnt exist. If youre reading this as an e-book, youve got it easy just click the web address to be taken directly to the web page.