{"id":130,"date":"2019-10-04T05:52:05","date_gmt":"2019-10-04T04:52:05","guid":{"rendered":"https:\/\/kleosafrica.com\/blog\/?p=130"},"modified":"2023-11-10T05:02:00","modified_gmt":"2023-11-10T04:02:00","slug":"keeping-records-and-preparing-accounts-as-an-entrepreneur","status":"publish","type":"post","link":"https:\/\/kleosafrica.com\/blog\/2019\/10\/04\/keeping-records-and-preparing-accounts-as-an-entrepreneur\/","title":{"rendered":"Keeping records and preparing accounts as an entrepreneur"},"content":{"rendered":"\n<p>Accounting\nisn\u2019t the most glamorous part of setting up or running a business. Most\nentrepreneurs would rather spend their time developing their product line or\ngrowing their client base. But accounting is important. Without it, your\nbusiness will never reach its full potential. A lack of adequate accounting\ncould even create legal problems that could easily have been avoided. <\/p>\n\n\n\n<p>As an\nentrepreneur you like to conceive an idea, set up a business, and watch it\ngrow. Most likely, maximizing profits is one of your goals. Unfortunately, many\nbusinesses lose money. How can this be avoided? By keeping accurate books and\nrecords. The steps below summarize the components of a company\u2019s financial\nmanagement system.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><a>1.1\u00a0\u00a0\u00a0\u00a0\u00a0 Keeping the books<\/a><\/h2>\n\n\n\n<p>All source\ndocuments of a business are recorded in day books. The day books are the\nprimary source of data for later preparation of financial statements. The\nlayout of day books varies according to the needs of a business. Accounting\nsoftware makes it easier to capture and record business transactions. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><a>1.2\u00a0\u00a0\u00a0\u00a0\u00a0 Introduction to financial statements<\/a><\/h2>\n\n\n\n<p>The income\nstatement and balance sheet are two key financial statements of a business. The\nincome statement shows the financial performance (profit or loss) of a\nbusiness. The balance sheet is a snapshot of the financial position of a\nbusiness at a point in time. It shows the assets, liabilities and capital of a\nbusiness. The trial balance is a useful starting point in the preparation of\nthe financial statements. Adjustments to the trial balance are normally made\nbefore financial statements are prepared, e.g. accruals, prepayments, closing\ninventory and depreciation. An inventory valuation is necessary for the\npreparation of financial statements. Depreciation is the spreading of the cost\nof non-current assets over a number of years. <\/p>\n\n\n\n<p>The best\nway to put this article to use is to practice what you have learned. Get your\nbusiness working as well as you can for you by ensuring you have good and\ntimely accounting information.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><a>1.3\u00a0\u00a0\u00a0\u00a0\u00a0 Action steps<\/a><\/h2>\n\n\n\n<ul><li>How are you going to organize yourself so that all source documents of your business are captured and kept in a fashion which allows you to look back easily on any transactions? For example, how are you going to do your sales invoices, where will you file them? <\/li><li>How are you going to record these business transactions? Written, in a spreadsheet or accounting software? <\/li><li>Write out the main expenses in your business. Think about how to group the expenses in categories which might be useful in preparing an income statement. Try to think of the best layout of the income statement for your business.<\/li><li>To familiarize yourself with the annual report of a company, choose four or five companies you know or find interesting. Go to their websites and download the most recent annual reports. They are often available in both PDF and web-page formats. Have a read through them and note any new items you find in the income statement or balance sheet and see if you can understand the notes to the accounts. <\/li><li>Have a look at their cash flow statements. See if you can make sense of where cash comes from and what it is used for. Are there any items which concern you? For example, is there a lot of cash flow in from borrowing? <\/li><\/ul>\n\n\n\n<p><strong>REFERENCES<\/strong><\/p>\n\n\n\n<p>Martin\nQuinn \u2018\u2019Book-keeping and Accounts for Entrepreneurs\u2019\u2019 (2009: Financial Times\nPress)<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Accounting isn\u2019t the most glamorous part of setting up or running a business. Most entrepreneurs would rather spend their time developing their product line or growing their client base. But accounting is important. Without it, your business will never reach its full potential. A lack of adequate accounting could even create legal problems that could easily have been avoided. <\/p>\n","protected":false},"author":1,"featured_media":131,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[7],"tags":[47,46,45],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts\/130"}],"collection":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/comments?post=130"}],"version-history":[{"count":1,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts\/130\/revisions"}],"predecessor-version":[{"id":132,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts\/130\/revisions\/132"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/media\/131"}],"wp:attachment":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/media?parent=130"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/categories?post=130"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/tags?post=130"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}