Basic Accountancy pot

1

1

Basic accountancy

Introduction to basic techniques on

how to handle money in your new business

2

2

WHAT IS ACCOUNTANCY .......................................................................................... 3

WHY ACCOUNTANCY?..................................................................................................... 3

ACCOUNTABILITY............................................................................................................ 4

ACCOUNTANCY STEP BY STEP ........................................................................................ 5

SHOULD I USE PC BOOKKEEPING.................................................................................... 6

BOOKKEEPING ON A PC .................................................................................................. 7

ADMINISTRATION MADE EASY ....................................................................................... 8

IT SYSTEMS ..................................................................................................................... 9

SAFEGUARDING YOUR ASSETS.............................................................................. 11

DELEGATED AUTHORITY AND SEPARATION OF DUTIES................................................. 11

RECONCILIATION........................................................................................................... 12

CASH CONTROL............................................................................................................. 13

PHYSICAL CONTROL...................................................................................................... 14

PRINCIPLES IN ACCOUNTING ................................................................................ 16

WHO IS ABLE TO DO THE ACCOUNTS ............................................................................ 16

DOUBLE-ENTRY BOOKKEEPING .................................................................................... 16

ACCOUNT PLAN - CHART OF ACCOUNTS ...................................................................... 18

EXAMPLE OF AN ACCOUNT PLAN.................................................................................. 19

VOUCHERS..................................................................................................................... 20

MAKE AN INVOICE......................................................................................................... 21

INPUT TO THE DAILY ACCOUNTANCY WORK ................................................. 23

OFFICE SUPPLIES ........................................................................................................... 23

DAILY ROUTINES FOR SHOPKEEPERS - AND OTHERS ................................................... 23

PURCHASE TRANSACTION VOUCHER............................................................................ 25

SALES TRANSACTION VOUCHER ................................................................................... 26

PAYMENT TRANSACTION VOUCHER ............................................................................. 27

SALARY ENTRIES AND RECORDS................................................................................... 27

STOCK REGISTRATION................................................................................................... 28

ADDING VOUCHERS ....................................................................................................... 30

NON-CASH VOUCHERS .................................................................................................. 30

RE-POSTING A VOUCHER............................................................................................... 31

CREDIT SALE ................................................................................................................. 32

MIS-ENTRY .................................................................................................................... 32

KEEPING ACCOUNTS MEANS LESS TROUBLE ............................................................... 33

3

3

What is Accountancy

Why accountancy?

You may have your own company or be managing a project. When you are

making money and spending money it is necessary to know how much

money you make and spend.

If you don’t know suddenly you have spent too much money.

Accountancy for an individual

When you get your salary at the end of the month you probably also make

your little accountancy in your head.

• You know that you have to buy food for the family, maybe pay rent for

the house and pay back a loan.

• If you have money left, you might buy a nice thing for yourself.

• If you have more expenses during a month than the money you earn,

you have a problem as you have not enough money.

Then you have to consider what to do.

Are you able to cut down some of your expenses or do you have to borrow

some money?

If you borrow money how are you then going to pay back the loan?

Is there some way you could make more money?

These considerations you have to go through every month. It is the same

for a shop, an IT company, a workshop, a graphics designer and many

other businesses.

Accountancy for a company

The only difference between a company and your personal accounting is

the amount of money and the number of transactions involved. With your

personal accountancy you can manage to keep track of the money

transactions in your head. In a company you need to put it on paper.

Otherwise you will lose track of the transactions within a week.

Tools for accountancy

To keep proper track of how much money is going in and out of the

company you can use a computer based bookkeeping programme.

In this programme you register all the money coming in the company. And

all the money going out of the company.

If you do this registering in a proper way you will always be able to monitor

how the company is doing.

At the same time you follow the financial legislation of the country.