QBB Bookkeeping Essentials Action Guide

Webinar Summary & Action Guide
QuickBooks Basics:
Bookkeeping
Essentials
By Gabrielle Fontaine, PB
www.BookkeepingDirect.com
QuickBooks Basics: Bookkeeping Essentials
This is NOT a Free Report!

Please DO NOT give this document to others. You are granted the right to
use this copyrighted document as a bonus for registering for the online
training webinar. If you would like to recommend the class to someone
else, please send them to: www.bookkeepingdirect.com/essentials/
© Gabrielle Fontaine, all rights reserved. PO Box 54814, Philadelphia, PA 19148
DISCLAIMER: No information contained in this report should be considered as financial, tax or legal
advice. Reliance upon information contained in this material is solely at the reader's own risk.
© Gabrielle Fontaine, PB - All Rights Reserved 2

Quick-Reference Index
Introduction ………………………………………………………………...3
Why Bookkeeping Matters ……………………………………………….4
A Basic Bookkeeping Overview …………….……………………………6
Tools For Keeping Track ……….……………………………………..6
Understanding the Chart of Accounts ……………………………….8
Two Key Reports that Keep Score ..…………………………………..13
Profit & Loss Statement ……………………………………………..10
Balance Sheet ………………………………………………………..12
How These Reports Work Together ………………………………..13
Double-Entry Bookkeeping – Some Ground Rules ………………….14
Cash or Accrual Basis? ………………………………………………15
The Basic Bookkeeping Process – An Arial View…………………16
Pulling It All Together in QuickBooks ……………………………..18
Conclusion ……………………………………………………………….27
Are Your Reports Telling You There's A Problem? ………………….28
Resources ………………………………………………………………..29
About the Author …………………………………………………………30

Introduction
Why should you care about keeping your financial records up to date
and understand how bookkeeping works?
Sound business decisions are based on a clear and up-to-date picture of your financial
situation. Without accurate financial records, your business is like a ship trying to cross
the Atlantic ocean without navigational equipment.
Eighty-four percent of small businesses today are using QuickBooks financial software.
And though QuickBooks is indeed an intuitive and powerful bookkeeping program,
many users struggle with common pitfalls that can distort their financial radar because
they don't understand their bookkeeping records.
In practical terms that could mean…
• Tax returns are not accurate, or cannot be filed at all, resulting in overpaid taxes
or accumulation of substantial interest and penalties.
• Funding from banks or other investors and securing credit is nearly impossible,
crippling future progress and growth.
• Vital strategic financial decisions are being made from a half-blind perspective,
which could lead to serious mistakes, even unexpected failure of the business.
Our mission today is to learn the essential, basic bookkeeping principles you need to
know so you can side-step the usual problems QuickBooks users wrestle with, as well
as reveal the meaning behind your financial reports so you can proactively control your
company's financial destiny!
We will ….
• Explore the basic bookkeeping functions going on “behind the scenes” in

QuickBooks
• Examine your two most critical financial reports and begin to assess the present
health of your business
• Learn where to find the information you need to plan for growth and greater
profitability

Why Bookkeeping Matters
Bookkeeping is…
Recording and categorizing the financial transactions that flow through your business,
which are then summarized on financial reports to reveal the financial health of your
company.
It is a detailed, historical record of the operation of your business, expressed in financial

terms.
Why we must do it
Two of the biggest reasons most everyone must keep financial records are…
Legal Requirements
Your company’s income, expenses and payroll must be accurately reported to

governmental authorities on a timely basis. That information is needed for tax purposes.
It may not be something we like to do, but it's the law.
Funding
Banks and other lenders require accurate bookkeeping records to assess the health
and risks of working with your company before funding will be considered. If you need to
get some financial backing, you need to have up-to-date and accurate bookkeeping
records.
But there are also many benefits to taking the time and effort to maintain your books!
On the next page is an illustration of how your bookkeeping records will actually help
your business succeed.

Six Ways Accurate Bookkeeping Helps Your Business

Succeed
Accurate financial recordkeeping can make or break your business!
1. Stay on top of your cash flow: Even a profitable business can go bankrupt if it
doesn’t track cash flow. Cash flow is about timing, and as we know, timing is
everything. That's true in business too!
2. Manage your customers and sales: Track what your customers are buying,
and you will be able to stay in contact with them in a personalized fashion,
building rapport, which in turn, drives more sales. You will be able to track trends
in your business and maximize your most profitable products or services.
3. Production: Know what goods and services you need so you never are caught
short-handed on a sale. You will also be in a position to establish credit and
preferred payment terms with your vendors.
4. Compliance: Once your records are updated and in one place, you can create
the reports needed to satisfy the legal reporting requirements of your business
5. Decision Making: Financial reports give you the insight into the health of your
business and where you are headed so you can make the decisions that will
assure success by design, not by chance.
6. Funding: Complete financial reports are necessary if you ever need to seek
outside funding to expand your business.

A Basic Bookkeeping Overview
It All Starts With Cash Flow
In the most basic terms….
As your business operates, cash and value are constantly flowing into and out of your
business.
Bookkeeping provides a system according to the rules of accounting to capture and

keep track of everything that’s going on in your business.
There are several tools that are used in the tracking system to record the financial
history of all transactions taking place.
Tools for Keeping Track
• Accounts
o This is where transactional information is recorded and stored
• General Ledger
o This is a summary of the transaction details that are recorded in the
accounts
• Chart of Accounts
o This is the master list of all the accounts that reside in the General Ledger

Understanding the Chart of Accounts
The master account list, or Chart of Accounts, contains all the different categories used
to organize your transactions. Each account in your Chart of Accounts is categorized
based on how it affects the overall value of your business.
There are five basic account categories:
1. Income = What is received based on what the business sells
2. Expense = What is paid out in order to run the business
3. Asset = What is owned and held by the business that retains value
4. Liabilities = What is owed to others, but has not yet been paid
5. Equity = What the value or worth of the business is – the real "bottom line"
You can think of each subcategory as a file folder, divided by type (e.g., your expense
accounts might include subfolders for advertising, car expenses, payroll, and office
expenses).
Quick Tip:
Try to keep your Chart of Accounts as simple as possible without too many
subcategories. QuickBooks can help you get started with a basic Chart of Accounts for

your industry type. Your accountant may also have a predefined Chart of Accounts that
is right for your type of business
Here is an example of what a very basic Chart of Accounts might look like:
Notice the five different categories of account types needed to record business
transactions.
The green shaded area shows the account types as they are classified in QuickBooks.
They follow the same basic types, but notice the descriptions of the types of Asset
accounts. Bank accounts are always considered a type of asset account, and in
QuickBooks they are key accounts.
Quick Tip: Avoid these common mistakes!
2. Setting up all accounts, including expense accounts, as bank accounts
• Bank accounts are those that you have with a financial institution, such as
your checking, savings or even an internet account, such as with PayPal
3. Classifying transactions as miscellaneous.
• It is important to properly classify all transactions as the are entered! It will

take you much less time to code transactions to the proper accounts at the
time you are entering them than to go back and try to remember and
classify them later.

So let's visually review what we've just learned about how the financial activity within
your business is captured and where it is recorded in your bookkeeping records.
The information is recorded into the appropriate accounts, which then flow through to
two vital financial reports:
1. The Profit & Loss Statement (also known as an Income Statement)
2. The Balance Sheet
Now we will discuss these reports in more depth and learn why they are so important to
use in managing and growing your business.

Two Key Reports That Keep Score
Think of your business as a car. You can drive the car by just looking out through the
front of the windshield. But you will eventually have serious problems if you don't have
any mirrors and your dashboard is not functioning properly.
Your business's reports or financial statements work similarly to your mirrors and your
dashboard. They allow you, as the business owner, to effectively drive your financial
vehicle, to see how the systems are operating, and steer your vehicle to your desired
destination successfully. Your financial dashboard can answer questions like…
• Are you burning through your cash too fast?
• Is a sufficient profit margin being realized on your new product line?
• Is production running too slowly or inefficiently?
Reports will organize the information you’ve “filed” away to help you see clearly how
well your business is running and keep your business moving in the right direction.
Let's examine in more detail the information contained in these two score-keeping
reports.
Profit & Loss (Income Statement)
There are three main areas of measurement that are found on this report:
– Income = Money coming in through sales
– Expenses = Money going out to pay bills
– Profit or Loss = What’s left over
• You score a WIN when there’s a profit!
You may recognize two of these categories from the five main "folders" in your Chart of
Accounts. That's right, the Income and Expense information contained in the Profit &
Loss Statement is the result of the transactions recorded in your bookkeeping accounts
under the Income and Expense categories for a specific period of time.
Now lets see what this report looks like in QuickBooks format.

This is a simplified example of what a Profit & Loss Statement looks like in QuickBooks.
You will notice that the Income and Expense sections are easy to identify, and each
account under these sections is slightly indented.
It is important to remember that this report gives you a "score" on how your business
has performed over a certain period of time.
The "bottom line" on this report shows whether or not your business was profitable
during a certain period of time (usually a month, a quarter, or a year).
Now let's examine the other major scorecard for your business.

Balance Sheet
There are also three main areas of measurement that are found on this report:
– Assets = What the business owns and holds of value
– Liabilities = What the business owes to others
– Equity = What the business is worth after everything is said and done
• You get a good score when your assets are worth more than your liabilities, and
you have a nice chunk of change leftover as equity
Again, you may recognize these categories as the other three of the five main "folders"
in your Chart of Accounts. The amounts reported here represent total balances from
your bookkeeping accounts under those categories at a specific point in time.
Now lets see what this report looks like in QuickBooks format.
• Remember – A
Balance Sheet
shows the assets,
liabilities, and
equity at a given
moment in time.
It is a snapshot of
your business's
financial condition
• The Equity section

may also include
Owners Equity
or Retained
Earnings accounts
• Assets =
Liabilities+Equity
Known as the
Accounting
Equation. It proves
whether your
books "balance"

How These Reports Work Together
The information on the Profit & Loss Statement flows through to the Equity section of
the Balance Sheet. This is the process in a nutshell.
– Net Profit or Loss (income – expenses) is calculated over a period of time

(month, quarter, year, etc.)
– The Net Profit or Loss amount either increases or decreases the Equity
reported on the Balance Sheet
– The balances of the Income and Expense accounts are reset to zero at
the end of each year
Here's a visual illustration of how this works (right from the webinar):
We can see how the total amount of the Net Income (profit) from the Profit & Loss
Statement flows through and is reported under the Equity section of the Balance Sheet
as Net Income and becomes a part of the Total Equity.

Double-Entry Bookkeeping – Some Ground Rules
Remember the Accounting Equation we learned about briefly when looking at the
Balance Sheet? This is one of the foundational rules of the standard bookkeeping
system that has been in use for centuries.
Double-entry bookkeeping is what makes the Accounting Equation work

Assets = Liabilities + Equity
The main rule for double-entry bookkeeping is total debits must always equal total
credits.
That means every financial transaction is recorded in the bookkeeping accounts with at
least one debit and one credit. It is a self-balancing system to help assure accuracy.
Therefore, if the debits and credits are ever out of balance, it means there is an error or
an incomplete transactions somewhere, and it must be corrected.
Each account is divided into two sides. Amounts added to one side increases the
account balance, while entries on the other side will decreases it.
The left side is always for debits and the right side for credits.
The type of account (based on the five main categories in the Chart of Accounts) is
what will determine whether the account balance is increased or decreased by a debit
or credit entry.
Side Note: Therefore debits are not always bad and credits are not always good,
as the retail industry would have us believe!
Is your head spinning yet?
I have some good news for you if it seems there is just so much to remember, when all
you want to do is run a successful business and keep good records.
Though this system of double-entry bookkeeping is still the accepted standard for
business recordkeeping and does in fact provides an efficient and accurate way to track

financial transactions, it was originally designed for paper-and-pencil recordkeeping.

That was how financial records were maintained long before the invention of computers.
It was also very time consuming.
Here's the good news! QuickBooks is a double-entry bookkeeping system, but it has
been designed to handle all the debits and credits behind the scenes for you, saving
you a tremendous about of time and hassle.
Every transaction recorded in QuickBooks automatically becomes a debit or a credit in

your accounts. In fact, true to the rules of double-entry bookkeeping, QuickBooks won’t
let you record a transaction until the total debits and credits are equal.
But as a savvy business owner, you are not completely off the hook yet! You must have
a basic grasp on what is going on behind the scenes in your financial records because
you need to be able to use (and understand the meaning of) the information you receive
by means of your financial reports, or you'll never be able to manage your business
effectively.
Understanding the basics of these principles also helps you to identify problems in your
bookkeeping records, as well as know which are the crucial coding fields during data
entry input.
The old cliché is certainly true when it comes to your bookkeeping records, even when
using QuickBooks: Garbage In, Garbage Out
Cash or Accrual Basis?
Another rule in your bookkeeping system that can have a big impact on the numbers
that show up on your reports, affecting the amount of taxes you pay, has to do with your
reporting method.
Your business generally must use one or the other method for your financial reporting.
– Cash Basis = Recording sales and expenses ONLY when cash is actually
received or paid out
– Accrual Basis = Recording income when a sale is made, and an expense when
a purchase is made, even if cash has not yet actually changes hands
The Accrual Basis method generally gives the most realistic picture of the condition of
your business since it shows a wider view of what has actually happened in the past,
what is happening in the present and in the known future.

Please Note: You may need to consult your accountant to determine the correct
method of reporting for your type of business. But you must be consistent once you’ve
selected your accounting method.
The IRS requires businesses that carry an inventory, such as retailers, to use the
accrual method.
But once again, when it comes to your reporting method, QuickBooks makes it a little
easier on you.
When you are running your financial reports In QuickBooks, you can easily switch
between cash and accrual reports at any time, regardless of the method you are
required to use for tax purposes.
The Basic Bookkeeping Process – An Arial View
So lets take one last look at the overall bookkeeping process, as performed in the
traditional bookkeeping system.
“Post” to General
Record Transactions
Ledger Accounts
(Journalizing)
(Chart of Accounts)
Financial Statements
Check for Accuracy
(Income Statement &
(Trial Balance)
Balance Sheet)
1. Record Transactions – With paper and pencil, this is done using journals. They
are like chronological diaries where the business transaction enters the
bookkeeping records. In QuickBooks, you use familiar forms to enter
transactions.

2. “Post” to the Ledger Accounts – Each transaction, which includes at least one
debit and one credit, is then transferred, or “posted” (as it is called in accounting
lingo), to each appropriate account in the Chart of Accounts. QuickBooks does
this for you behind the scenes.
3. Check for Accuracy – Errors can easily be made with a manual system. So in
traditional bookkeeping, a Trial Balance was prepared as a preliminary report
before financial statements were completed at the end of an accounting period.
The Trial Balance lists each account's debit and credit balance at a certain point
in time to reveal any adjustments that might need to be made before the
accounting period is closed. It also reveals whether there are any errors in the
records, if the total debits and credits do not balance. It’s a “trial” report to see if
they “balance”!
QuickBooks does have a trial balance available, which you accountant might use
to make any necessary year-end adjustments. But most QuickBooks users never
need to use this feature, since debit and credit entries are automatically kept in
balance.
4. Financial Statements are then prepared, once the records are known to be
accurate and in balance. The Income Statement (or Profit & Loss Statement) and
the Balance Sheet are the two primary reports used to assess the financial well-
being of a company.
Recording and categorizing all of your business transactions into the proper accounts,
summarizing and adjusting them, and then preparing financial statements can be an
enormous, labor-intensive task without the help of a computer and software. Thankfully,
your computer and QuickBooks make the whole process a whole lot easier than it used
to be!
Now that you have a basic knowledge of how traditional bookkeeping works, let’s see
how QuickBooks pulls it all together to do much of the heavy lifting for you, so you can
spend your time more effectively managing and growing your business.

Pulling It All Together With QuickBooks®
Here's how QuickBooks handles the bookkeeping behind the scenes and makes it
easier for you to maintain accurate financial records:
• QuickBooks uses familiar forms to guide transactional data entry, such as with
invoices, checks, and bills
• QuickBooks makes bookkeeping easier for non-accountant users by hiding most

of the accounting details, handling the debit and credit entries for you.
• Accountants and Bookkeepers who are used to traditional bookkeeping methods,

however, have the option of using traditional double-entry accounting in
QuickBooks, if desired.
Accountant Tip: To reveal double-entry transaction detail (debits and credits), use
CNTL + Y
So let's dive in and actually see how everyday bookkeeping transactions are recorded in
QuickBooks, and how they show up on your financial reports.
Daily Task Walk-Through
As a business owner, you need to understand the essential processes of tracking the
money coming in and going out of your business on a daily basis. Remember, your
reports are only as good as your records!

We’ll now walk through six common accounting tasks, so you can get a feel for the how
to categorize a transaction on a day-to-day basis, as well as understand how the
transactions impact your financial reports.
Record a Sale / Invoice a Customer
Screen shot of the Home Page

in QuickBooks 2007 (Premier)
Two ways to record a sale:
1. Use a Sales Receipt when

you receive payment at the time
of the sales
2. Use an Invoice when the

customer will pay you after the
sale has been made.
We will record a sale using an Invoice.
Key information to record:
1. Customer
2. Date
3. Item – This is where

much of the bookkeeping is
done! It is very Important to
code items correctly in
QuickBooks!
4. Quantity
5. Payment Terms
Now let's see how this transaction shows up on the financial reports.

1. Under Income, the Sales account total increases (accrual basis reports)
2. Under Assets, the Accounts Receivable account increases
3. Net Income (on P&L) increases, so Equity (Balance Sheet) increases
Now let's see how to record the transactions when the customer pays the invoice
Receive a Payment
From the Home Page, choose

Receive Payments
You will be taken to an internal

QuickBooks form used to record
customer payments

This is what the customer payments form looks like:
Here is the information you

need to enter on this form:
1. Customer Name
2. The payment type
3. The amount paid
Important Note:
QuickBooks will attempt to guess which invoice(s) the customer is paying and
automatically enter a checkmark next to those invoice(s). You must review that the
correct invoices are checked so that the payment will in fact be applied correctly to the
customer's account.
Never blindly accept the information QuickBooks automatically enters for you!
Now let's see how this transaction shows up on the financial reports.
1. Since the sale has

already been recorded, the
Sales account on the Profit
& Loss is unaffected by the
receipt of payment.
2. The money is no longer

owed by the customer, so
Accounts Receivable is
decreased, since this
account represents money
owed to the company by
customers.
3. Undeposited Funds,
which is an Asset account,
is increased.

Undeposited Funds is an account that is automatically created by QuickBooks to keep

track of money that has been received but not yet deposited in your bank account. This
"holding" account is unique to QuickBooks.
The next step is to deposit the payment into the company's bank account.
Record a Deposit
From the Home Page, choose

Record Deposits
You will be taken to an internal

QuickBooks form used to record
deposits you make at the bank.
If there are any

customer
payments being
"held" in the
Undeposited
Funds account,
this window will
pop up
automatically.
You should check

off all the
customer
payments that are
included in the
deposit here.
Then click OK.

On the deposit
form you
should:
1. Be sure the
correct bank
account is
showing in the
Deposit To
field.
2. Be sure the
correct date of
when the
actual deposit
was made is
selected.
3. Be sure that the deposit total matches the actual amount deposited to the bank
account.
Let's see how this deposit shows up on the financial reports.
We can see that the effect of the bank deposit is just moving the money from one asset
account to another on the Balance Sheet – from Other Current Assets (Undeposited
Funds) to the Checking account. The Equity and Sales amounts remain unchanged.

Now we’ll walk through transactions that are recorded when money goes out of your
business.
Receive a Bill
If you receive bills and don’t pay

them right away, use the Enter
Bill icon on the Home Page when
the bills come in.
If you do pay your bills as soon

as they are received, skip to #2
on the next page.
This is a form created by

QuickBooks to simulate the
actual bill you have received
from the vendor.
Important Info to Enter:
1. Vendor Name
2. Payment amount
3. Transaction Type (e.g.,

Expense – “Utilities”)
Entering your bills before you pay them is one of the ways QuickBooks can keep track
of what you owe to others, otherwise known as your liabilities. The amount you owe on
outstanding bills will show up in your total Accounts Payable. Keeping track of how
much is owed to others helps you manage your business wisely because you know how
much you will need to meet your future obligations.

Pay a Bill or Record an Expense

1. Use the Pay Bills icon, if you
entered the bill but haven't yet
paid it.
You will then choose the bills

you want to pay and the check
will be automatically created for
you, based on the information
you already entered.
OR
2. If you pay your bills as soon

as you get them, then choose
the Write Checks icon to record
the expense.
Let’s walk through the check-writing process in QuickBooks.
Similar to entering a Bill, this is

the important Info to enter on a
check:
1. Vendor Name as the Payee
2. Payment amount
3. Transaction Type (Expense –

“Utilities”)
Note: It is always a good idea

to use the Memo field for
transactions being recorded in
QuickBooks. They show up on
detail reports and can assist in
resolving coding errors.
Rule of Thumb: Always try to include a brief memo about each transaction.
Now it's time again to see how the transaction, this expense payment, shows up on the
financial reports.

1. Whether you paid the bill using Pay Bills or the Write Checks functions, your Expense
account will be increased.
2. If you paid your bill as soon as you received it, your checking bank account (Asset)
will decrease.
If you only recorded the bill but have not yet actually paid it, the Liability account
(Accounts Payable, which is a Current Liability account on the Balance Sheet) will be
increased instead.
3. Whether you paid the bill immediately, or only recorded the bill, the Equity will be
decreased.
We have seen how each individual transaction affects both of our key financial reports
on a day-to-day basis. The real value to you, however, is in using what your reports are
telling you to manage your business effectively. That is up to you.

Conclusion
Congratulations!
• You have learned the basics of traditional bookkeeping principles and you know
how money flows into and out of your company. You've also seen how
QuickBooks tracks your daily transactions “behind the scenes.” Now you are…
• Better equipped to read and use the vital information your two most critical
financial scorecards – the Profit & Loss Statement and Balance Sheet –
are telling you about the present health of your business.
• You know where to find the answers to management questions that

contribute to the strategic planning necessary for greater growth and
profitability along the road to your business success.
More webinars coming up!
More QuickBooks Basics webinars are in the development process right now. If you
have any burning questions about QuickBooks, or suggestions for future QuickBooks
training topics, please let us know.
Make Your QuickBooks Basics Webinar Suggestions Here

Are Your Reports Telling You There's a Problem?
www.CashFlowKickStart.com
This new, immediately downloadable 30+ page special report reveals kick-butt, fast
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Resources
QB QuickTips Video Blog – Free quick training lessons to show you tips, tricks and
insider strategies for maximizing your business cash flow using QuickBooks every day.
QuickBooks University – On-demand QuickBooks training videos, starting from the

beginning, so you can use the program correctly and effectively for a very affordable
price.
QuickBooks Forms & Supplies – Checks and other business forms especially
designed to work with QuickBooks software.
Cash Flow Kick-Start – Whether you use QuickBooks or not, every business needs
good cash flow. This special report will show you easy-to-use, strategies that get quick
results and bring more cash into your business on a regular basis.
The Accounting Game – Learn and understand basic accounting through the eyes of a
child running a lemonade business.
The McGraw-Hill 36-Hour Course in Accounting – For a more in-depth, detailed

study of traditional paper-and-pencil bookkeeping methods.

About the Author
Gabrielle Fontaine, PB is a freelance Professional Bookkeeper

and Certified QuickBooks ProAdvisor who assists Internet savvy
entrepreneurs and self-employed professionals get their books
under control, save taxes, and maximize profits.
Gabrielle attained her designation as a Professional Bookkeeper

from Universal Accounting Institute, and has Advanced
Certification in QuickBooks as a ProAdvisor through Intuit, Inc.,
the makers of QuickBooks and Quicken software. She is also a
member of the National Association of Tax Professionals.
Over the past 26 years, Gabrielle has held a variety of positions

in financial and administrative services, working in a freelance
capacity for the last 17 years. Gabrielle is most appreciated by
her loyal clientele for her personalized interest in their individual
needs, impeccable honesty, and concentration on accuracy.
Most recently, Gabrielle has narrowed her primary focus to specialize in QuickBooks consulting
and training on a virtual basis, working with her clients via telephone and the Internet
exclusively.
Gabrielle is a nationally published writer of business articles, reports, and an industry-specific

business operations manual. Her most recent publication is Cash Flow Kick-Start, a special
report which shows small business owners how to build their own on-demand cash flow system.
Gabrielle recently relocated from the Boston area to South Philadelphia.
Contact Gabrielle Now

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Webinar Summary & Action Guide

This is NOT a Free Report!

© Gabrielle Fontaine, all rights reserved. PO Box 54814, Philadelphia, PA 19148

© Gabrielle Fontaine, PB - All Rights Reserved 2

Why Bookkeeping Matters ……………………………………………….4

A Basic Bookkeeping Overview …………….……………………………6

Tools For Keeping Track ……….……………………………………..6

Understanding the Chart of Accounts ……………………………….8

Two Key Reports that Keep Score ..…………………………………..13

Profit & Loss Statement ……………………………………………..10

Balance Sheet ………………………………………………………..12

How These Reports Work Together ………………………………..13

Double-Entry Bookkeeping – Some Ground Rules ………………….14

Cash or Accrual Basis? ………………………………………………15

The Basic Bookkeeping Process – An Arial View…………………16

Pulling It All Together in QuickBooks ……………………………..18

Are Your Reports Telling You There's A Problem? ………………….28

About the Author …………………………………………………………30

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In practical terms that could mean…

• Explore the basic bookkeeping functions going on “behind the scenes” in

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Why Bookkeeping Matters

It is a detailed, historical record of the operation of your business, expressed in financial

Your company’s income, expenses and payroll must be accurately reported to

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Six Ways Accurate Bookkeeping Helps Your Business

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A Basic Bookkeeping Overview

It All Starts With Cash Flow

In the most basic terms….

Bookkeeping provides a system according to the rules of accounting to capture and

Tools for Keeping Track

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Understanding the Chart of Accounts

There are five basic account categories:

1. Income = What is received based on what the business sells

2. Expense = What is paid out in order to run the business

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Quick Tip: Avoid these common mistakes!

2. Setting up all accounts, including expense accounts, as bank accounts

3. Classifying transactions as miscellaneous.

• It is important to properly classify all transactions as the are entered! It will

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1. The Profit & Loss Statement (also known as an Income Statement)

2. The Balance Sheet

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Two Key Reports That Keep Score

• Are you burning through your cash too fast?

• Is a sufficient profit margin being realized on your new product line?

• Is production running too slowly or inefficiently?

Profit & Loss (Income Statement)

– Income = Money coming in through sales

– Expenses = Money going out to pay bills

– Profit or Loss = What’s left over

• You score a WIN when there’s a profit!

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– Assets = What the business owns and holds of value