BOOKKEEPING FOUNDATIONS

Learn Bookkeeping Fundamentals

This course can be used to gain a solid foundation of knowledge as a beginner, or to enhance your working knowledge. It is a comprehensive foundation course providing skills and knowledge to assist you in;

• Re-entering the workplace.
• Managing or owning your own business.
• Refreshing and bringing up to date your existing skills and knowledge.
• Enhancing your capability in your work in administration or accounts departments.
• Improving your CV - giving you additional skills and evidence of further studies you have undertaken.

Following this course you will be able to;

• Do your own bookkeeping, expand your work skills or start your own small business as a bookkeeper.
• Develop essential knowledge as a business owner or as a bookkeeper working within a business.

Lesson Structure

There are 13 lessons in this course:

1. Introduction – Nature, Scope & Function Of Bookkeeping
   • What Is Bookkeeping
   • Difference Between Accountants & Bookkeepers
   • History Of Bookkeeping
   • Bookkeeping Terminology
   • Understanding Language
   • Why Do We Need Bookkeeping
   • Bookkeeping As A Management Tool
   • Business Structures
   • Business Structures Vary Internationally
   • Financial Information
   • Accounting Conventions & Doctrines
   • Accounting Standards
   • Australian Accounting Standards
   • UK Accounting Standards
   • International Cooperation On Standards
2. The Balance Sheet
   • What Is A Balance Sheet
   • Assets & Liabilities
   • Components Of A Balance Sheet
   • What Items Do Not Appear On The Balance Sheet
   • Example Of A Balance Sheet
   • Tracking Business Performance
   • T Format Balance Sheet
   • Balance Sheet Allocations
   • What Is Working Capital
3. Analysing & Designing Accounting Systems
   • What Is An Accounting System
   • Understanding The Flow Of Information In Bookkeeping
   • Other Business Documents - Statements, Order Forms, Quotations
   • Steps In The Bookkeeping Process
   • Designing The System
   • Analyzing Business Needs
   • Designing The Accounting System
   • Designing The Chart Of Accounts
   • Writing A Chart Of Accounts
   • Designing The Type Of Journals Needed
4. The Double Entry Recording Process
   • Ledgers
   • Opening Up The General Ledger
   • Ledger Accounts/ Sub Ledger
   • The General Ledger
   • Entries Resulting From Transactions
   • Recording Transactions
   • Different Types Of Accounts
   • A Trial Balance
   • Ledger Accounts & Double Entry Bookkeeping
   • Recording Entries
   • Rules To Follow
   • Analysis Chart
   • Footing Ledger Accounts
   • Balancing Ledger Accounts
   • The Trial Balance
   • Accounting For Drawings
   • Revision Of Definitions & Processes
5. The Cash Receipts & Cash Payments Journal
   • Recording Cash Transactions In Journals
   • Multi Column Receipts Journal
   • Cash Payments Journal
   • Multi Column Cash Payment Journal
   • What Discounts Are Allowed
   • Accounting Discounts Allowed & Received
6. The Credit Fees & Purchases Journal
   • Credit Sales & Credit Purchases
   • Credit Sales Journal
   • Debtors Subsidiary Journal & Control Account
   • Using A Debtors Schedule
   • The Credit Purchases Journal
   • Creating A Creditors Subsidiary Ledger & Schedule
   • The Cash Payments Journal & Creditors Control Account
7. The General Journal
   • Recording Non-Standard Transactions
   • Designing The General Journal
   • Posting To A General Journal
   • General Journal Entries & Ledgers
   • Anomalies
   • Recording Credit Purchases Of Non-Current Assets
   • Recording Owners Contributions Or Withdrawals
   • Recording Debts That Are Written Off
   • Recording Contra Entries
   • Recording Purchase Returns
   • Other Uses For A Journal
8. Closing The Ledger
   • Closing At The End Of The Accounting Period
   • Preparing For The New Accounting Period
   • Transferring Balance Day Closing Entries
   • Profit & Loss Account
   • Determining Gross Profit
   • Simple Profit & Loss Account
   • Balance Sheet
   • Businesses Making A Loss Rather Than Profit
   • Owner Withdrawing Revenue
   • The End Results
9. The Profit & Loss Statement
   • The Balance Sheet & How It Relates To Profit & Loss Statement
   • Using Net Profit Figure To Evaluate Business Performance
   • What Is Profitability?
   • Gross Profit
   • Net Profit
   • Cash Flow Margin
   • Return On Assets Margin
   • Gearing Ratio & How It Relates To Cash Flow
   • Return On Owners Equity Margin
   • Informative Profit & Loss Presentation
   • Segmentation
   • Functional Classification- Grouping Expenses
   • Showing Extraordinary Expenses & Revenue
   • Accounting For Unused Materials Or Stock
   • Why We Need To Calculate The Cost Of Materials Used
10. Depreciation On Non-Current Assets
    • Intangible Assets
    • Depreciation Methods
    • Depreciation Calculation Methods
    • Calculating Depreciation With The Straight Line Method
    • What If There Is No Residual Value
    • How To Enter Depreciation Into The Books
    • Declining Balance Method Of Depreciation
    • Calculating Percentage Rate Of Depreciation
    • Production Units Method Of Depreciation
    • What About Intangible Assets
    • Keeping Track Of Assets And Depreciation
    • Asset Register
    • End Of Useful Life For Assets
    • Loss Disposal Of Asset Account
11. Profit Determination & Balance Day Adjustments
    • Cash And Accrual Accounting
    • Cash Accounting
    • Accruals Accounting
    • Balance Day Adjustments To Final Accounts
    • How To Record Prepaid Expenses
    • Showing In The General Ledger
    • What About If We Actually Owe Unpaid Expenses On Balance Day
    • Receiving Income In Advance
    • Other Balance Day Adjustments – Stock, Bad Debts, Depreciation, Discounts
    • A More Comprehensive Treatment Of Trial Balance
    • Partnerships
    • Companies
    • Clubs And Non Profit Organisations
    • Using A Ten Column Worksheet Or Spreadsheet
12. Cash Control: Bank Reconciliation & Petty Cash
    • Ways Of Handling Money
    • Outgoing Monies (Payments)
    • Methods Of Controlling Cash
    • Recording Cash Transactions
    • The Cash Book
    • Bank Transactions & The Cash Book
    • Bank Reconciliation Statements
    • The Cash Cycle – Cash Flow & Liquidity
    • Account Receivable Turnover Ratio
    • Operating Cash Flow Ratio
    • Inventory Turnover Ratio
    • Professional Journals
13. Cash Control: Budgeting
    • Introduction
    • Budget Types
    • The Cash Budget
    • Factoring In Safety Margins
    • Variable Costs
    • Budget Reviews
    • Taxes And Budgets
    • GST Or VAT Taxes
    • Tax Input Credits
    • Taxable Supplies

Aims

• Outline the uses of financial information; accounting standards and conventions and the basic functions of bookkeeping for service businesses.
• Describe the use of balance sheets and their function.
• Outline setting procedures for a bookkeeping system; steps in its use; the flow of information and use of other business documents.
• Formulate procedures for the setting up of a double entry bookkeeping system.
• Outline the functions and specific uses of ‘special journals’.
• Outline methods used to set up credit sales journal and credit purchases journals.
• Outline the setting up procedures for a general journal and its use.
• Describe methods used to close ledger accounts at the end of an accounting period.
• Describe profit and loss statement preparation methods.
• Outline the use of appropriate methods for the depreciation of non-current assets.
• Outline the fundamentals of cash and accrual accounting; the ‘matching process’; the necessity for balance day adjustments.
• Describe the cash cycle; the importance of cash control and its various methods including petty cash systems and bank reconciliation processes.
• Outline the role of budgets and their importance to business.

What You Will Do

• Describe the activities of service businesses.
• What is the difference between an accounting convention and a doctrine?
• How is the accounting period convention important to making business decisions?
• Why might the accounting entity convention be important in business?
• What is the Doctrine of ‘Materiality’?
• Create a list of differences and a list of similarities between the goods and services tax system you investigated and Australia’s system.
• Define the term ‘Balance Sheet Equation’ .Describe what a balance sheet is made up of. Know where items appear on the balance sheet. Describe 3 balance sheet formats.
• Describe the meaning and importance of separating current assets from fixed current assets and current liabilities from long-term/deferred liabilities on the balance sheet.
• Prepare a balance sheet.
• Show the equations used for determining a business’s working capital.
• Explain what the difference between a ledger and a journal.
• Describe source documents.
• Describe a chart of accounts and its use; draw up a chart of accounts.
• List the journals used in an accounting system.
• Describe a Statement of Account and outline its use.
• Define double entry accounting.
• Describe a ledger account and the difference between balancing a ledger account and footing a ledger account.
• Define a trial balance; prepare a trial balance.
• Compare three-column ledger accounts with T-form ledger accounts; enter transactions into a ledger account; balance a ledger account.
• Describe the use of a drawing account, and how drawings are classified in the balance sheet.
• Describe the functions of an analysis chart include an example using transactions to show A, L and OE.
• Prepare a T form Balance Sheet.
• Describe a Cash Receipts and Cash Payments journal their uses and their source documents.
• Differentiate between a general ledger and a special journal.
• Outline the benefits of a multi-column cash journal and a simple format cash journal.
• Design a cash payments journal and a cash receipts journal. Describe the functions of posting references and sundry columns. Post items to a cash receipts and cash payments journal.
• Explain the difference between a ‘discount allowed’ and a ‘discount received’.
• Describe the difference between a credit sale and a credit purchase and state the source documents. Prepare a credit fees/sales and a credit purchases journal and do a range of appropriate postings.
• Describe the role and usefulness of a Subsidiary Ledger.
• Outline the role and usefulness of a ‘Debtors Control’ account.
• Show the double entry of goods bought on credit.
• Describe a Control Account.
• Describe the aim of a general journal and its key sections. Change a general journal to accommodate subsidiary ledger. Correct errors in a general ledger account.
• Explain the term bad debt. Use the general journal to record a bad debt. Understand ‘cents in the dollar’ offer in relation to a bad debt. Write off bad debts. Prepare a general journal. Record entries to a general journal. Know how the general journal is used in preparing closing entries. Set up a general journal. Close off a general journal.
• Explain the term and use of ‘Contra Entries’.
• Record non-current assets in a purchases journal.
• Know the difference between closing and balancing a general ledger account.
• Identify which ledgers are closed off at the end of the accounting period.
• Describe a profit and loss account and how to work out a net profit or a net loss. Know which account does the net profit or loss is transferred to.
• Describe a profit and loss statement and how it relates to the balance sheet.
• Know why functional classification and segmentation used on profit and loss reports.
• Describe extraordinary expenses and how they are listed on the profit and loss statement and why.
• Describe ‘Materials on Hand’ calculate materials on hand. State how they are reported on the profit and loss statement. Prepare a profit and loss statement.
• Describe the difference between cash accounting and accrual accounting.
• Describe Balance Day Adjustments and their importance to bookkeeping.
• Describe pre-paid expenses and outline the difference between the asset and expense approaches to the recording of prepaid expenses.
• Describe the importance of reversing entries and when they are done.
• Know a range of common balance day adjustments.
• Prepare a Trail Balance for a business that carries stock and has balance day adjustments. Create general journal for adjusting entries; Post the entries to the relevant general ledger accounts. Close off the accounts to profit and loss. Prepare a new trial balance; Prepare the profit and loss statement; Prepare the balance sheet.
• Enter reversing entries for the new accounting period.
• Outline the usefulness of a 10 column worksheet.
• Make entries into a cash book and present a reconciliation statement.
• Draw up and use a petty cash book.
• Describe bank reconciliation statements and their use.
• Describe methods of cash control; describe liquidity and its link to cash flow.
• Describe accounts receivable turnover ratio; operating cash flows ratio; Inventory turnover ratio.
• Outline the importance of budgets to a business; describe a range of budgets.
• Describe the term ‘safety margin’.
• Describe the term ‘cash budget’ and outline how debtors and creditors are included.
• Describe a range of variances in a budget.
• Describe the importance of budget reviews.

Why is Bookkeeping Necessary?

There are legal reasons for bookkeeping. Most developed countries require accounting records to be kept; and taxation to be paid based upon those records. There are other reasons as well though. Bookkeeping is an important tool for any business, that enables better management of resources. It records and tracks money received and money spent (or lost). This in turn allows you to identify earnings and losses; and ultimately produce assessments of what is happening such as profit and loss.

The Profit And Loss Statement

The Profit and Loss statement is also called a Statement of Financial Performance. Profit occurs when income over a given period is greater than expenses. Loss will occur if expenses are greater than income.  Income can be regarded as any proceeds from the sale of goods or services offered by the business. Other forms of income can include, interest paid on bank accounts, interest derived through money investment in stocks (as dividends), donations, etc.

Expenses are all payments made in conjunction with the production of the income. Such things may include labour, rates, rent, power, licences, registrations, raw material costs, advertising, etc. 

The Balance Sheet and how it relates to the Profit and Loss Statement

The accounting system is based on 5 basic account types:

1. Asets

2. Liabilities

3. Equity

4. Income

5. Expenses

The first three above are the balance sheet accounts (they do not appear on profit and loss statements) the last two, income and expense account are profit and loss accounts. The balance between the income and expenses (the net profit) is the figure transferred from the profit and loss account to the balance sheet as owner’s equity, at the end of the accounting period. 

Every time income is received, the owner’s equity is increased.  Every expense decreases owner’s equity. If a profit is achieved over a given period, the owner’s equity is increased (in other words the owner has made a profit). This occurs through the transfer of net profit figure to the owner’s equity section of the balance sheet. 
 
This could give the equation:

Assets = liabilities + original owner’s equity + profit (– loss)

Or, this could be described as:

Assets = liabilities + original owner’s equity + (income - expense)

In order for a profit and loss statement to be meaningful to the reader, the period for which the profit or loss is calculated must be clearly shown on the statement. If a business makes a profit for example of $10,000, the reader may surmise that this is not a good return on investment - if they think that the profit was for a full year. However if this profit related to a single accounting period of say a month - then the reader would gain a quite different perspective of the business’s performance. So a profit and loss statement must be clear and easily read and understood.

This course teaches you all of the fundamental tasks that a bookkeeper undertakes in anything but exceptional or very large enterprises.

If you want to improve your business, why not improve your bookkeeping skills with this training course? Enrol today and improve your business.