Basic bookkeeping terms sbdc

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Information about Basic bookkeeping terms sbdc

Published on December 22, 2016

Author: AnitaRJohnson

Source: slideshare.net

1. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 1 Basic BookkeepingBasic Bookkeeping TermsTerms

2. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 2 Basic BookkeepingBasic Bookkeeping TermsTerms  BASIC BOOKKEEPING TERMSBASIC BOOKKEEPING TERMS MODULE 1MODULE 1  Mission: The mission of this module is toMission: The mission of this module is to educate the participant in basic bookkeepingeducate the participant in basic bookkeeping terms and to build a chart of accounts whileterms and to build a chart of accounts while using any accounting software.using any accounting software.

3. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 3 Basic BookkeepingBasic Bookkeeping TermsTerms  Learning ObjectivesLearning Objectives  To understand & apply bookkeepingTo understand & apply bookkeeping terms.terms.  To build & use the Chart of AccountsTo build & use the Chart of Accounts

4. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  AccountAccount Accrual basis *Accrual basis *  Accounting Equations *Accounting Equations * Adjusting entriesAdjusting entries  Account numbersAccount numbers Assets *Assets *  Accountant *Accountant *  AccountingAccounting  Accounts payableAccounts payable  Accounts receivableAccounts receivable Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 4

5. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Accountant VSAccountant VS BookkeeperBookkeeper Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 5

6. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Accountant VSAccountant VS BookkeeperBookkeeper  Accountant – A person, whose profession is accounting, that classifies business transactions and interprets business transactions. Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 6

7. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Accountant VSAccountant VS BookkeeperBookkeeper Bookkeeper – A person who earns his or her living by recording financial activities of a business and who is concerned with recording of transactions. Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 7

8. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Balance Sheet*  Bank Reconciliation  Bookkeeper*  Capital*  Cash*  Cash Disbursement Journal  Cash Receipts

9. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Accruals VS CashAccruals VS Cash  Accrual basisAccrual basis – An accounting system in which– An accounting system in which revenue is recognized when earned andrevenue is recognized when earned and expenses are recognized only when incurred.expenses are recognized only when incurred.

10. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 0 Accruals VS CashAccruals VS Cash  Cash basis accountingCash basis accounting - An accounting- An accounting method where receipts are recorded during themethod where receipts are recorded during the period they are received, and expenses areperiod they are received, and expenses are recorded in the period in which they arerecorded in the period in which they are actually paid. Cash accounting is one of theactually paid. Cash accounting is one of the two forms of accounting.two forms of accounting.

11. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Charts of Accounts*  Check  Checking Account  Closing Entry  Corporations*  Cost of Goods Sold

12. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Credit*  Creditors  Current Assets  Debit *  Double-entry Accounting*  Draw

13. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Expense*  Equity*  Federal Unemployment Tax  FICA Taxes  Financial Statement*  Fiscal Period  Footing

14. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Gross Pay  General Journal  General Ledgers  Income Statement*  Interest  Journal  Journalizing

15. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Ledger  Liabilities*  Long-term Liabilities  Net Income*  Net Purchases  Net Sales  Opening Entry

16. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Outstanding Checks  Partnership*  Payroll Accounting  Payroll Register  Payroll Tax Expense  Payroll Expense  Purchase Journal

17. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Retained Earning  Revenue*  Salary  Sales Discount  Sales Journal  Schedule of Accounts of Payable  Schedule of Accounts of Receivable

18. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Understand & ApplyUnderstand & Apply Bookkeeping TermsBookkeeping Terms  Sole Proprietorships*  State Unemployment Taxes  Subsidiary Ledger  “T” Accounts*  Trail Balance

19. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 19 Build & Use The Chart OfBuild & Use The Chart Of AccountsAccounts What is Chart of Accounts?What is Chart of Accounts?  The Chart of Accounts (COA) is designed toThe Chart of Accounts (COA) is designed to mirror the accounting equation. The COA bymirror the accounting equation. The COA by definition is a list of accounts used by adefinition is a list of accounts used by a business to define each class of items of whichbusiness to define each class of items of which money or its equivalent that is spent ormoney or its equivalent that is spent or received. The COA serves as a useful sourcereceived. The COA serves as a useful source for locating a given account within the ledger.for locating a given account within the ledger.

20. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 20 The Chart Of AccountsThe Chart Of Accounts  The Accounting EquationThe Accounting Equation  The accounting equation is Assets =The accounting equation is Assets = Liabilities + Equity.Liabilities + Equity.  Example = $1,000 = $100 + $900Example = $1,000 = $100 + $900

21. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 1 The Chart Of AccountsThe Chart Of Accounts “T” Accounts“T” Accounts  The Accounting EquationThe Accounting Equation

22. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 22 Preparing Chart OfPreparing Chart Of AccountsAccounts  When preparing the COA, the bookkeeper should knowWhen preparing the COA, the bookkeeper should know the following:the following:  The Accounting EquationThe Accounting Equation  Accrual or cash accountingAccrual or cash accounting  AssetsAssets  LiabilitiesLiabilities  Equity or CapitalEquity or Capital  RevenuesRevenues  ExpensesExpenses  Type of Company (non-profit, profit, service, retail)Type of Company (non-profit, profit, service, retail)  Corporation, Partnership, Sole Owner, LLC, LLPCorporation, Partnership, Sole Owner, LLC, LLP

23. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 23 Preparing Chart ofPreparing Chart of AccountsAccounts Determine what basis the client is…Determine what basis the client is…  Accrual basisAccrual basis – An accounting system in which– An accounting system in which revenue is recognized when earned andrevenue is recognized when earned and expenses are recognized only when incurred.expenses are recognized only when incurred.  Cash basis accountingCash basis accounting - An accounting method- An accounting method where receipts are recorded during the periodwhere receipts are recorded during the period they are received, and expenses are recorded inthey are received, and expenses are recorded in the period in which they are actually paid. Cashthe period in which they are actually paid. Cash accounting is one of the two forms of accounting.accounting is one of the two forms of accounting.

24. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 24 What is in the Chart ofWhat is in the Chart of AccountsAccounts Assets – Property owned that hasAssets – Property owned that has monetary value. The total resources of a person ormonetary value. The total resources of a person or business.business. Types of Assets:Types of Assets:  Accounts ReceivableAccounts Receivable  BuildingBuilding  CarsCars  CheckingChecking  Money MarketsMoney Markets  PropertyProperty

25. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 25 What is in the Chart ofWhat is in the Chart of AccountsAccounts Liabilities – Monies owed to outsidersLiabilities – Monies owed to outsiders Types of liabilities:Types of liabilities:  Accounts PayableAccounts Payable  Loan PayableLoan Payable  Note PayableNote Payable

26. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 26 What is in the Chart ofWhat is in the Chart of AccountsAccounts Equity or CapitalEquity or Capital  Capital-Capital-  InvestmentInvestment  WithdrawalsWithdrawals

27. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 27 Types of CompaniesTypes of Companies that require Chart ofthat require Chart of AccountsAccounts Type of Company (non-profit, profit, service,Type of Company (non-profit, profit, service, retail)retail) Corporation, Partnership, Sole Owner, LLC,Corporation, Partnership, Sole Owner, LLC, LLPLLP  Partnership – An association of two or morePartnership – An association of two or more persons to carry on as co-owners of a businesspersons to carry on as co-owners of a business  Sole Proprietorships – A business owned by oneSole Proprietorships – A business owned by one person that is not incorporatedperson that is not incorporated

28. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 28 Another ComponentAnother Component Needed for Chart ofNeeded for Chart of AccountsAccounts RevenueRevenue is income net sales, other income (interestis income net sales, other income (interest income), cost of goods sold, and operating revenue.income), cost of goods sold, and operating revenue. Revenue’s normal balance is found on the creditRevenue’s normal balance is found on the credit side (right) of the “T” account.side (right) of the “T” account. Types of Revenue:Types of Revenue:  Rent ExpenseRent Expense  InterestInterest IncomeIncome  Limousine RentalLimousine Rental  Insurance IncomeInsurance Income  Consulting FeesConsulting Fees

29. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 29 Components Needed forComponents Needed for Chart of AccountsChart of Accounts Expense:Expense: The expenses are classified as allThe expenses are classified as all the expenses that are ordinary and necessarythe expenses that are ordinary and necessary for the business. The normal balance for thefor the business. The normal balance for the expenses is found on the debit side (left) of theexpenses is found on the debit side (left) of the “T” account.“T” account. Types of Expenses:Types of Expenses:  Telephone ExpenseTelephone Expense  Rent ExpenseRent Expense  Interest ExpenseInterest Expense  Insurance ExpenseInsurance Expense

30. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 30 Activity for Chart ofActivity for Chart of AccountsAccounts  Prepare a Chart of Accounts for anPrepare a Chart of Accounts for an  Accounting Consulting Corporation/AccrualAccounting Consulting Corporation/Accrual AccountingAccounting  Bank of America/Checking AccountsBank of America/Checking Accounts  No EmployeesNo Employees  Line of CreditLine of Credit  2 Buildings2 Buildings  1 Company Car1 Company Car  Revenue TaxesRevenue Taxes  Consulting FeesConsulting Fees

31. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Activity for Chart ofActivity for Chart of AccountsAccounts  AssetsAssets  Current AssetsCurrent Assets  Bank of America/Checking AccountsBank of America/Checking Accounts  Accounts ReceivablesAccounts Receivables  Company CarCompany Car  Long-Term AssetsLong-Term Assets  Building #1Building #1  Building #2Building #2

32. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Activity for Chart ofActivity for Chart of AccountsAccounts  LiabilityLiability  Current LiabilityCurrent Liability  Line of CreditLine of Credit  Accounts PayableAccounts Payable  CapitalCapital  InvestmentsInvestments  Retained EarningsRetained Earnings

33. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Activity for Chart ofActivity for Chart of AccountsAccounts  RevenueRevenue  Tax PreparationTax Preparation  ConsultingConsulting  ExpensesExpenses  TelephoneTelephone  Interest ExpenseInterest Expense  Office SuppliesOffice Supplies  Meals ExpensesMeals Expenses  InsuranceInsurance

34. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Activity for Chart ofActivity for Chart of AccountsAccounts

35. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 35 Fill in the BlankFill in the Blank  Assets are found on theAssets are found on the ________ Financial Statement.________ Financial Statement.  Debits are usually on the _____Debits are usually on the _____ side of the “T” account.side of the “T” account.

36. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Fill in the BlankFill in the Blank  Credits are found on the ______ side ofCredits are found on the ______ side of the “T” accounts.the “T” accounts.

37. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Fill in the BlankFill in the Blank  Define the accounting equation:Define the accounting equation:  Describe chart of accounts:Describe chart of accounts:

38. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Basic BookkeepingBasic Bookkeeping AnswersAnswers Slide 17-Balance SheetSlide 17-Balance Sheet -Left Side-Left Side Slide 18-Rigth SideSlide 18-Rigth Side Assets=liabilities + OEAssets=liabilities + OE Chart of AccountsChart of Accounts

39. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Basic BookkeepingBasic Bookkeeping TermsTerms SummarySummary Questions?????????????Questions?????????????

40. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 40 Basic BookkeepingBasic Bookkeeping TermsTerms

41. Basic BookkeepingBasic Bookkeeping Terms- Module 1Terms- Module 1 Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc Copyright @ Anita R Johnson &Copyright @ Anita R Johnson & Associates, IncAssociates, Inc 41 Basic BookkeepingBasic Bookkeeping TermsTerms Anita R Johnson, Financial PsychologistAnita R Johnson, Financial Psychologist

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