SimpliNumbers|Online Bookkeeping| Payroll Services| Financial Consulting
  • Home
  • Pricing
  • Blog
  • Xero Advisors
  • Contact Us

MUSINGS OF A BOOKKEEPER

Accounting Basics for the Non-Accountant

4/12/2016

0 Comments

 
For a lot of people, accounting looks like a big ball of confusion. A maze of spreadsheets and receipts can overwhelm even the most number savvy business owner. We hope that explaining some of the key terms of accounting will help to calm your fears.

Here are some definitions of accounting terms for non-accountants:
​

Debits and Credits - A debit is money coming out of an account and a credit is money coming in. When you subtract debits from credits you get the balance of your account. If you have more debits than credits, well, you’re in the red.
Picture
The Profit and Loss Statement (aka Income Statement) - A summary of all operating transactions that occurred within a specific period of time – usually a calendar month. In other words: sales minus expenses. This report lets you know if your business is profitable during that period of time.
Costs of Goods Sold - For business with inventory The Costs of Goods Sold, or COGS, is subtracted from revenue and appears as a line item in the Profit and Loss Statement and is usually this type of business’ largest cost. Once you calculate the Costs of Goods Sold you can calculate your margins.
​

Accrual vs. Cash Accounting – There are two main ways to track your accounts. Either accrual or cash accounting. Here is how they differ:
  • Cash accounting recognizes transactions when there are inflows or outflows of cash – when customers pay or when you pay your bills.
  • Accrual accounting recognizes revenue when it is invoiced and expenses when they are due. Here are some benefits:
    • See the variability of income and expenses over a period of several months. When invoices or bills are paid late, they may fall into the next period on a cash basis which may give a false impression of volatility
    • Seeing revenue and expenses when they occur, regardless of when they are paid, allows you to more accurately forecast the future of your business.
Accounting Software, particularly cloud accounting software, has made using professional software for bookkeeping attainable to everyone. These systems make bookkeeping easier, but non-accountants should be warned: errors can and do still occur if the user does not have a grasp of basic accounting principles, so just because you can do your own bookkeeping, doesn't mean that you should.

Contact us for all of your bookkeeping needs. We’ll not only keep your books in good order, we’ll also demystify your numbers so that they make sense to you.​
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Categories

    All
    Accounting
    Bookkeeping
    Cloud
    Employee Compensation
    Entrepreneurs
    Office Support
    Outsourcing
    Payroll
    Small Business
    Taxes
    Tips

    RSS Feed


Call us today at 800 901-3006​
GET STARTED
HOME
PRICING
CONTACT
BLOG
WHY XERO

SimpliNumbers is a professional accounting, bookkeeping, and payroll services firm run by talented professionals with a commitment to integrity, diligence, and customer satisfaction by providing high-quality and innovative service to small and medium sized businesses. 
SIMPLINUMBERS  | 7550 E 53rd Pl, Unit 17381 | DENVER, CO 80217 | PH: 800 901 3006
© 2025 SimpliNumbers | All Rights Reserved
  • Home
  • Pricing
  • Blog
  • Xero Advisors
  • Contact Us