Accounting 101 or basic accounting deals with the basic concept of accounting and recording transactions that occur on a daily basis. This means all monetary transactions, such as money coming in and going out, money paid to us and the money paid by us. It also allows you to manage and analyze income and expenses and the total cash flow a business is the production of the final statements the income statement, balance sheet and cash flow statement.

Debits and Credits

method of double entry accounting requires a debit and a credit for each transaction. Each transaction affects two accounts – one must be charged, and must be credited. The general rule of thumb is that debits increasing assets, expenses, dividends and losses and reduce debt and equity, while loans to do the opposite: they reduce assets and increasing liabilities, revenues, earnings and equity. To debit an account, record the amount on the left side of the account; to credit the account, enter the amount right. The abbreviation “DR" represents debit transactions and “CR" represents credit.

Resources and Debts

Assets represent what the company owns; they add economic value to the company. Liabilities are what the company owes and reduce the economic value of the business. Registers balance sheet assets and liabilities of the business. They are often categorized as short-term and long-term assets and / or liabilities. Current assets, also known as current assets, represents the liquidity position of the business and include things like bank accounts, accounts receivable and inventory. Fixed or non-current assets include items such as property and machinery. Short-term or short-term liabilities of operations include items such as creditors and accrued charges, while long-term liabilities include loans and mortgages.

Financial Statement

In the end the year, each company is preparing a set of year-end statements. These statements record, manage and analyze all the financial data and activities throughout the year. The income statement is one of these final statements. It describes the revenue and expenditure of the company and the total profit or loss for a given financial period. Even if they are used at various intervals throughout the year, the balance sheet is also a year-end report, and as such, summarizes the assets and liabilities of the business and demonstrate the net worth at the end of the financial year. The cash flow statement is the third balance sheet that is used for reporting financial data and records cash coming in and going out of business.

Sticky

As an entrepreneur, you want to minimize your costs and maximize your revenue. Accounting is often seen as a boring task for many business owners, yet many who choose to take care of the bookkeeping yourself – usually in order to save money. After all there are a plethora of accounting software that makes things easier. Others choose an hire an accounting firm to take care of the accounts and thus have more time to work on revenue-generating activities – the company was founded. There are advantages and disadvantages to both options.

Despite laws and regulations on accounting obligation, even the entrepreneur great benefit to, the records, to oversee operations and direct it towards the goals set. The catering company"s current accounts typically have full control and transparency in the economic situation. If you do it yourself and you have a very good handle on things. As an entrepreneur, however, it may be hard to keep up to date on all the applicable rules and changes in tax and other legislation applicable to accounting, tax, taxes, salaries etc. It is easier and more motivating to keep versed in regulations affecting the company"s core business.

Benefits of Bookkeeping by Yourself

  • Good control and visibility into the company"s financial position.
  • It may feel fun and useful to yourself to take care of the matter .
  • You experience it as it does not cost anything – it costs your time and often anxiety when complex issues arise.

Disadvantages of Bookkeeping by Yourself

  • Accounting takes a lot of time, which results in you getting less time for other things.
  • Without any knowledge of the area, there is a higher risk of making mistakes.
  • It might get boring to see records in a long turn.

Advantages of Hiring an Accounting Firm

  • Everything should be done right and done on time.
  • You save time and can focus on what you other important things that you need to do.
  • You do not have to keep track of a lot of records.

Drawbacks of Hiring an Accounting Firm

  • It might be an added expense that you need to cover on monthly basis.
  • You get less control over the operations.

An entrepreneur can put a price on their own or an employee"s time and compare it with what he would need to pay for in hiring an accounting firm. In many cases, most would come to the conclusion it"s more advantageous to hire an accounting firm. In particular, if you choose an agency that offers a good solution for the company, maintain a good control and get visibility into the company"s financial position through regular and transparent reporting, you would be sure that have spent your money wisely.

Overall, it still depends on your personal preference if you want to handle things on your own or prefer the aid of professionals who would give you a peace of mind.