 The resources you need, in order to run your

business and produce the goods or

services, are people, methods, materials
and machines.
 To have all these resources, you need
money.
 It is important that you know how to gather,
organize, coordinate and record the
money or financial resources of your
business. This is called financial
management.
 The physical record keeping of someone’s
transactions as they relate to assets,
liabilities, income and expenses.
 Refers to the process of accumulating,
organizing, storing, and accessing the
financial information base of an entity,
which is needed for two basic purposes:
a) Facilitating the day-to-day operations of the
entity and
b) Preparing financial statements, tax returns, and
internal reports to managers.
1. Monitor the progress of your business
2. Prepare your financial statements
3. Identify sources of your income
4. Keep track of your deductible expenses
5. Keep track of your basis in property
6. Prepare your tax returns
7. Support items reported on your tax
returns
1. Gross receipts are the income you
receive from your business.
 Cash register tapes
 Deposit information (cash and credit
sales)
 Receipt books
 invoices
2. Purchases are the items you buy and resell
to customers. If you are a manufacturer or
producer, this includes the cost of all raw
materials or parts purchased for
manufacture into finished products.
 Cancelled checks or other documents that
identify payee, amount, and proof of
payment/ electronic funds transferred
 Cash register tape receipts
 Credit card receipts and statements
 invoices
3. Expenses are the cost you incur (other
than purchases) to carry on your business
 Cancelled checks / electronic fund
transferred
 Cash register tapes
 Account statements
 Credit card receipts and statements
 Invoices
 Petty cash slips for small cash payments
4. Travel, Transportation, Entertainment,
and Gift expenses
5. Assets are the property, such as
machinery and furniture, that you own
and use in your business.
 You need records to compute the
annual depreciation and the gain or loss
when you sell the assets.
Documents for assets should show the following
information:
 When and how you acquired the assets
 Purchase price
 Cost of any improvements
 Deductions taken for depreciation
 Deductions taken for casualty losses, such as losses
resulting from fires or storms
 How you used the asset
 When and how you disposed of the asset
 Selling price
 Expenses of sale
6. Employment taxes. Keep all records of
employment for at least 4 years.
 Bookkeeping is the process of recording
daily transactions in a consistent way
and is a key component to building a
strong business foundation.
 A bookkeeper’s territory is daily financial
transactions, which include purchases,
receipts, sales and payments.
 Recording these items are usually done
through a general ledger or journal.
 Bookkeeper is a person whose job is to
keep records of the financial affairs of a
business.
 Functions of a bookkeeper:
1. Recording financial transactions
2. Posting debits and credits
3. Producing invoices
4. Maintaining and balancing subsidiaries,
general ledgers, and historical accounts
5. Completing payroll
 Double entry accounting is a
recordkeeping system under which
every transaction is recorded in at least
two accounts.
 There are two columns in each account,
with debit entries on the left and credit
entries on the right.
 In double accounting entry, the total of
all debit entries must match the total of
all credit entries
 A journal consisting of several accounts,
each of which can be arranged as a “T”
with the left side of the “T” for debits and
right side for credits.
 Debits are increases to asset and
expenses and decreases to liability and
equity accounts.
 A bookkeeper periodically copies journal
transactions into a general ledger,
called posting.
 General ledger is where all the
accounting information collected is
brought together.
 General ledger can have a separate
page for the different account
categories used in the ledger, the
balance sheet and income statement
are then created from the general
ledger.