Bookkeeping is simply the keeping of books. Business books. Instead of words and phrases such as one might find in a best-selling novel, the language of accounting is built upon debits and credits. Do you need to know this? Maybe, maybe not.
There are accounting systems that are available to consumers that do not require any knowledge of accounting. QuickBooks is one such suite of accounting software that comes in a variety of flavors depending upon the need of the user. Some businesses require multiple users responsible for different areas such as accounts receivable or accounts payable, while some businesses can be a one-person show. That is the beauty of accounting and bookkeeping. The language is the same no matter how big you are. Sure, there may be greater scrutiny and detail for a Fortune 500 company vs. a small S-corp, but the debits and credits behind the scene are still the same.
Wait. There are those debits and credits again. What the heck are those?
In physics, for every action there is a reaction. In accounting, the concept very much is the same. The debits and credits for any given transaction must equal each other at the end of the day. This system of double entries has been around for centuries. Whenever you write a check for example, your bank account goes down and whatever expense account it was for goes up. This transaction can be represented by debits and credits. (For the record, your bank account is an asset and by convention is reduced by a credit. Sound backwards? That’s because banks account from their perspective!)
Okay, that’s all fine and good you say, but what I want to know is the bottom line. How much money is my business making or losing?
That, of course, is why we’re here. At Johnston Accountancy we can help you understand what it all adds up to. Or, we can do the heavy lifting behind the scenes and deliver concise reports that gauge the temperature of your business. The nice thing about that is we are here to help you grow and let you get back to the thing that you do best – running your business!
The good thing about QB is it can grow with your business. All those debits and credits going on behind the scenes is the language of business
As with most things in life, the more you put into it, the more you get out of it.