Bookkeeping Foundations

TRAIN AS A BOOKKEEPER

Bookkeeping is an essential role for most businesses, and because of this there are many opportunities available. As a bookkeeper you are not restricted to any specific industry, making it a very flexible career option.

Are you:

• Looking to retrain
• Wanting to add another skill to your skill set
• Interesting in developing or refreshing your existing bookkeeping knowledge 

• Business owners and Managers
• Administration or accounts employees
• Anyone seeking a career as a bookkeeper

This course covers many different areas so will provide you with a comprehensive level of knowledge, if this is what you are after then enrol with us today!

Lesson Structure

There are 13 lessons in this course:

1. Nature, Scope and Function of Bookkeeping
   • What is bookkeeping?
   • Difference between accountants and bookkeepers.
   • History of bookkeeping.
   • Bookkeeping Terminology.
   • Understanding language.
   • Why do we need bookkeeping.
   • Bookkeeping as a management tool.
   • Business structures.
   • Business structures vary internationally.
   • Financial information.
   • Accounting conventions and doctrines.
   • Accounting standards.
   • Australian accounting standards.
   • UK accounting standards.
   • International cooperation on standards.
2. Balance Sheets
   • What is a balance sheet.
   • Assets and liabilities.
   • Components of a balance sheet.
   • What items do not appear on the balance sheet.
   • Example of a Balance Sheet.
   • Tracking business performance.
   • T format balance sheet.
   • Balance sheet allocations.
   • What is working capital.
3. Analysing and Designing Accounting Systems
   • What is an accounting system.
   • Understanding the flow of information in bookkeeping.
   • Other business documents -statements, order forms, quotations.
   • Steps in the bookkeeping process.
   • Designing the System.
   • Analysing business needs.
   • Designing the accounting system.
   • Designing the chart of accounts.
   • Writing a chart of accounts.
   • Designing the type of journals needed.
4. Double Entry Recording Process
   • Ledgers.
   • Opening up the general ledger.
   • Ledger accounts/ sub ledger.
   • The general ledger.
   • Entries resulting from transactions.
   • Recording transactions.
   • Different types of accounts.
   • A trial balance.
   • Ledger accounts and double entry bookkeeping.
   • Recording entries.
   • Rules to follow.
   • Analysis chart.
   • Footing ledger accounts.
   • Balancing ledger accounts.
   • The trial balance.
   • Accounting for drawings.
   • Revision of definitions and processes.
5. The Cash Receipts and Cash Payments Journal
   • Recording cash transactions in journals.
   • Multi column receipts journal.
   • Cash payments journal.
   • Multi column cash payment journal.
   • What discounts are allowed.
   • Accounting discounts allowed and received.
6. The Credit Fees and Purchases Journal
   • Credit sales and credit purchases.
   • Credit sales journal.
   • Debtors subsidiary journal and control account.
   • Using a debtors schedule.
   • The credit purchases journal.
   • Creating a creditors Subsidiary Ledger and schedule.
   • The cash payments journal and creditors control account.
7. The General Journal
   • Recording non standard transactions.
   • Designing the general journal.
   • Posting to a general journal.
   • General journal entries and ledgers.
   • Anomalies.
   • Recording credit purchases of non current assets.
   • Recording owners contributions or withdrawals.
   • Recording debts that are written off.
   • Recording contra entries.
   • Recording purchase returns.
   • Other uses for a journal.
8. Closing the Ledger
   • Closing at the end of the accounting period.
   • Preparing for the new accounting period.
   • Transferring balance day closing entries.
   • Profit and loss account.
   • Determining gross profit.
   • Simple profit and loss account.
   • Balance sheet.
   • Businesses making a loss rather than profit.
   • Owner withdrawing revenue.
   • The end results.
9. The Profit and Loss Statement
   • Introduction.
   • The balance sheet and how it relates to Profit and Loss Statement.
   • Using net profit figure to evaluate business performance.
   • What is profitability?
   • Gross Profit.
   • Net Profit.
   • Cash flow margin.
   • Return on assets margin.
   • Gearing ratio and how it relates to cash flow.
   • Return on owners equity margin.
   • Informative profit and loss presentation.
   • Segmentation.
   • Functional classification- Grouping expenses.
   • Showing extraordinary expenses and revenue.
   • Accounting for unused materials or stock.
   • Why do we need to calculate the cost of materials used.
10. Depreciation on Non-current Assets
    • Intangible assets.
    • Depreciation methods.
    • Depreciation calculation methods.
    • Calculating depreciation with the straight line method.
    • What if there is no residual value.
    • How to enter depreciation into the books.
    • Declining balance method of depreciation.
    • Calculating percentage rate of depreciation.
    • Production units method of depreciation.
    • What about intangible assets.
    • Keeping track of assets and depreciation.
    • Asset register.
    • End of Useful life for assets.
    • Loss disposal of asset account.
11. Profit Determination and Balance Day Adjustments
    • Cash and accrual accounting.
    • Cash accounting.
    • Accruals accounting.
    • Balance day adjustments to final accounts.
    • How to record prepaid expenses.
    • Showing in the general ledger.
    • What about if we actually owe unpaid expenses on balance day.
    • Receiving income in advance.
    • Other balance day adjustments – stock, bad debts, depreciation, discounts.
    • A more comprehensive treatment of trial balance.
    • Partnerships.
    • Companies.
    • Clubs and non profit organisations.
    • Using a ten column worksheet or spreadsheet.
12. Cash Control: Bank Reconciliation and Petty Cash
    • Ways of handling money.
    • Outgoing monies (payments).
    • Methods of controlling cash.
    • Recording cash transactions.
    • The cash book.
    • Bank transactions and the cash book.
    • Bank reconciliation statements.
    • The cash cycle – cash flow and liquidity.
    • Account receivable turnover ratio.
    • Operating cash flow ratio.
    • Inventory turnover ratio.
    • Professional journals.
13. Cash Control: Budgeting
    • Introduction.
    • Budget types.
    • The cash budget.
    • Factoring in safety margins.
    • Variable costs.
    • Budget reviews.
    • Taxes and budgets.
    • GST or VAT taxes.
    • Tax input credits.
    • Taxable supplies.

Aims

• Outline the uses of financial information; accounting standards and conventions and the basic functions of bookkeeping for service businesses.
• Describe the use of balance sheets and their function.
• Outline setting procedures for a bookkeeping system; steps in its use; the flow of information and use of other business documents.
• Formulate procedures for the setting up of a double entry bookkeeping system
• Outline the functions and specific uses of ‘special journals’.
• Outline methods used to set up credit sales journal and credit purchases journals
• Outline the setting up procedures for a general journal and its use
• Describe methods used to close ledger accounts at the end of an accounting period.
• Describe profit and loss statement preparation methods.
• Outline the use of appropriate methods for the depreciation of non-current assets.
• Outline the fundamentals of cash and accrual accounting; the ‘matching process’; the necessity for balance day adjustments.
• Describe the cash cycle; the importance of cash control and its various methods including petty cash systems and bank reconciliation processes.
• Outline the role of budgets and their importance to business.

What You Will Do

• Describe the activities of service businesses.
• What is the difference between an accounting convention and a doctrine
• How is the accounting period convention important to making business decisions?
• Why might the accounting entity convention be important in business?
• What is the Doctrine of ‘Materiality’?
• Create a list of differences and a list of similarities between the goods and services tax system you investigated and Australia’s system.
• Define the term ‘Balance Sheet Equation’ .Describe what a balance sheet is made up of. Know where items appear on the balance sheet. Describe 3 balance sheet formats.
• Describe the meaning and importance of separating current assets from fixed current assets and current liabilities from long-term/deferred liabilities on the balance sheet.
• Prepare a balance sheet.
• Show the equations used for determining a business’s working capital.
• Explain what the difference between a ledger and a journal.
• Describe source documents.
• Describe a chart of accounts and its use; draw up a chart of accounts.
• List the journals used in an accounting system.
• Describe a Statement of Account and outline its use.
• Define double entry accounting.
• Describe a ledger account and the difference between balancing a ledger account and footing a ledger account.
• Define a trial balance; prepare a trial balance.
• Compare three-column ledger accounts with T-form ledger accounts; enter transactions into a ledger account; balance a ledger account.
• Describe the use of a drawing account, and how drawings are classified in the balance sheet
• Describe the functions of an analysis chart include an example using transactions to show A, L and OE.
• Prepare a T form Balance Sheet.
• Describe a Cash Receipts and Cash Payments journal their uses and their source documents.
• Differentiate between a general ledger and a special journal.
• Outline the benefits of a multi-column cash journal and a simple format cash journal.
• Design a cash payments journal and a cash receipts journal. Describe the functions of posting references and sundry columns. Post items to a cash receipts and cash payments journal.
• Explain the difference between a ‘discount allowed’ and a ‘discount received’
• Describe the difference between a credit sale and a credit purchase and state the source documents. Prepare a credit fees/sales and a credit purchases journal and do a range of appropriate postings.
• Describe the role and usefulness of a Subsidiary Ledger.
• Outline the role and usefulness of a ‘Debtors Control’ account.
• Show the double entry of goods bought on credit.
• Describe a Control Account
• Describe the aim of a general journal and its key sections. Change a general journal to accommodate subsidiary ledger. Correct errors in a general ledger account.
• Explain the term bad debt. Use the general journal to record a bad debt. Understand ‘cents in the dollar’ offer in relation to a bad debt. Write off bad debts. Prepare a general journal. Record entries to a general journal. Know how the general journal is used in preparing closing entries. Set up a general journal. Close off a general journal.
• Explain the term and use of ‘Contra Entries’
• Record non-current assets in a purchases journal
• Know the difference between closing and balancing a general ledger account.
• Identify which ledgers are closed off at the end of the accounting period.
• Describe a profit and loss account and how to work out a net profit or a net loss. Know which account does the net profit or loss is transferred to.
• Describe a profit and loss statement and how it relates to the balance sheet.
• Know why functional classification and segmentation used on profit and loss reports
• Describe extraordinary expenses and how they are listed on the profit and loss statement and why.
• Describe ‘Materials on Hand’ calculate materials on hand. State how they are reported on the profit and loss statement. Prepare a profit and loss statement.
• Describe the difference between cash accounting and accrual accounting.
• Describe Balance Day Adjustments and their importance to bookkeeping.
• Describe pre-paid expenses and outline the difference between the asset and expense approaches to the recording of prepaid expenses.
• Describe the importance of reversing entries and when they are done.
• Know a range of common balance day adjustments.
• Prepare a Trail Balance for a business that carries stock and has balance day adjustments. Create general journal for adjusting entries; Post the entries to the relevant general ledger accounts. Close off the accounts to profit and loss. Prepare a new trial balance; Prepare the profit and loss statement; Prepare the balance sheet.
• Enter reversing entries for the new accounting period.
• Outline the usefulness of a 10 column worksheet.
• Make entries into a cash book and present a reconciliation statement.
• Draw up and use a petty cash book.
• Describe bank reconciliation statements and their use.
• Describe methods of cash control; describe liquidity and its link to cash flow.
• Describe accounts receivable turnover ratio; operating cash flows ratio; Inventory turnover ratio.
• Outline the importance of budgets to a business; describe a range of budgets.
• Describe the term ‘safety margin’.
• Describe the term ‘cash budget’ and outline how debtors and creditors are included.
• Describe a range of variances in a budget.
• Describe the importance of budget reviews.

Learning to Control Finance Starts with Good Bookkeeping

This course will teach you how to remain aware of your financial position, and by doing that, you maintain financial viability. Knowing your finances enables you not only to know whether you are profitable, but also - how profitable you are, and in what way you are (or are not) profitable.
 
Profitability and making a profit are two different things.To determine if a business made a profit you take expenses away from revenue. Profitability however is a measure of how efficient a business is at generating revenue. It measures performance i.e. the way a business uses its resources to make a profit. There are several mathematical ratios used to measure profitability.

These ratios are usually divided into two types:

1. Margin rations.
2. Return ratios.

Margin ratios demonstrate a business’s ability to produce net profits from sales.
Examples of margin ratios:

• Gross profit margin
• Net profit margin
• Cash flow margin

Return rations are a measure of how able a business in generating wealth (returns) for the owner or shareholders.
Examples of return ratios:

• Return on assets
• Return on equity
• Cash return on assets

Without Profit Business is not Sustainable

At the end of any accounting period (commonly each tax year), a business should take stock of their position and determine whether the business is profitable or not. What you learn in this course will allow you to do that.

Once the trial balance has been completed, the profit report and the balance sheet can be prepared. The trial balance prepared before closing the ledger shows the balance of every general ledger account – assets, liabilities, proprietorship, revenues and expenses.

The profit and loss report uses the information gathered in the profit and loss account to present information in a succinct and easily understood manner. It readily shows the reader (who may not necessarily be expert in accounting or bookkeeping) how a business is performing.

The profit report is prepared using the balances of the revenue and expense accounts which are transferred to the profit and loss account.  The profit or loss can then be calculated in the general ledger through the general journal. The profit and loss account is then closed in readiness for the new accounting period.  The new accounting period needs to start with a zero balance in order to accurately reflect the profit and loss from the new period only (revenue and expenses from a previous period are not relevant to a new period). This then is the last step undertaken in the double entry bookkeeping process.

The balance sheet is prepared using the balances of the assets, liabilities and proprietorship accounts and profit (or loss) from the profit report.  As all these figures, except for the profit, are found in the trial balance, the reports can be prepared from the trial balance.

The Profit And Loss Statement

The Profit and Loss statement is also called a Statement of Financial Performance. Profit occurs when income over a given period is greater than expenses. Loss will occur if expenses are greater than income.  Income can be regarded as any proceeds from the sale of goods or services offered by the business. Other forms of income can include, interest paid on bank accounts, interest derived through money investment in stocks (as dividends), donations, etc.

Expenses are all payments made in conjunction with the production of the income. Such things may include labour, rates, rent, power, licenses, registrations, raw material costs, advertising, etc.

The Balance Sheet and how it relates to the Profit and Loss Statement

The accounting system is based on five basic account types:

1. Assets
2. Liabilities
3. Equity
4. Income
5. Expenses

The first three above are the balance sheet accounts (they do not appear on profit and loss statements) the last two, income and expense account are profit and loss accounts. The balance between the income and expenses (the net profit) is the figure transferred from the profit and loss account to the balance sheet as owner’s equity, at the end of the accounting period.

Every time income is received, the owner’s equity is increased.  Every expense decreases owner’s equity. If a profit is achieved over a given period, the owner’s equity is increased (in other words the owner has made a profit). This occurs through the transfer of net profit figure to the owner’s equity section of the balance sheet.

A new equation could then be suggested:

Assets = liabilities + original owner’s equity + profit (– loss)

Or this could be described as:

Assets = liabilities + original owner’s equity + (income - expense)

In order for a profit and loss statement to be meaningful to the reader, the period for which the profit or loss is calculated must be clearly shown on the statement. If a business makes a profit for example of £10,000, the reader may surmise that this is not a good return on investment - if they think that the profit was for a full year. However if this profit related to a single accounting period of say a month - then the reader would gain a quite different perspective of the business’s performance. So a profit and loss statement must be clear and easily read and understood.

WHY STUDY WITH ACS?

There are lots of reasons why you should sign up to do this course with us, including:

• The course is detailed to ensure that you have the level of knowledge required to apply the practices in the work place
• Within each lesson you have the opportunity to apply your learning to activities which enables you to practice different concepts 
• Knowledge of these key areas will enable you to stand out from other applicants when it comes to applying for jobs, it will also give you greater confidence
• Working in bookkeeping enables you to work in many different sectors and business types, giving you flexibility now and in the future
• Our subject specialist tutors will be there to support you throughout your course, they are only too happy to share their industry knowledge and experience with you
• When studying with us you set your own deadlines, meaning you study at your own pace enabling it to fit around other commitments

TAKE THE NEXT STEP AND ENROL NOW!

You can enrol on the course now, but if you have any questions about the content of the course or studying with ACS, then please get in touch with us today - use our FREE COURSE COUNSELLING SERVICE to get in touch with our expert tutors. They will be pleased to help you!