Bookkeeping

Whether you are a Beginner Bookkeeper or have some knowledge of Bookkeeping, these FAQs should help you understand a bit more.

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FREQUENTLY ASKED QUESTIONS (FAQ) ABOUT BOOKKEEPING

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What is Bookkeeping?

 

Bookkeeping is a way to keep records of the financial affairs of your business.

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Is doing Bookkeeping stressful?

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Dividing your time between your multiple tasks as a business owner can make bookkeeping feel stressful. As such, most business owners prefer to leave the bookkeeping to VF Accountants.

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What are the basic tasks performed in Bookkeeping?

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The following are required to maintain the basic business records of a business:

• Sales i.e. goods and/or services sold. Also known as Turnover.

• Purchases i.e. goods and/or services bought.

• Stock and work in progress.

• Cashbook, where all money received and paid by the business, are recorded.

• Reconcile, that is, check your Cashbook back to your Bank Statements.

• Sales Ledger where all sums owing to the business are recorded. This is also known as Trade Debtors or Accounts Receivable.

• Purchase Ledger which records all amounts due to be paid by the business. This is also known as Trade Creditors or Accounts Payable.

• Details of any loans taken out.

• Movements of transactions in a Director's Loan Account (for limited company).

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What further work may be required in Bookkeeping?

 

Our clients often require us to carry out the above primary tasks for them. Furthermore, most of our clients like to see a clearer picture of their finances on a month to month basis. Thus, VF Accountants often carry out further bookkeeping entries:

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• Review:

  • Profit & Loss Account which summarizes Sales and Expenses to provide Profit or Loss for the period.

  • Balance Sheet which summarizes what your business owns and owes.

  • General Ledger which shows all the above categories.

• Ensure Stock Valuation report matches back to Stock Asset in Balance Sheet.

• Keep a Fixed Asset Register, that is, a list of property, plant and machinery which the business owns.

• As these fixed assets are not expected to be converted into cash within a year, we spread these costs. This is known as Depreciation.

• Post Payroll Journals where there are Employees.

• Check Her Majesty's Revenue & Customs (HMRC) Tax Service for any Pay As You Earn (PAYE) Tax & National Insurance Contributions (NIC) to be paid.

• If PAYE Tax & NIC is paid late, account for Interests on late payments.

• Reconcile, that is, tie back Value Added Tax (VAT) in your books to VAT Returns and Liabilities.

• Calculate and post Prepayments. A Prepayment is where you made a payment before you received goods or services, or before a debt is due.

• Calculate and post Accruals. An Accrual is a charge for work done but not yet invoiced.

• Update the Director's Loan Account and post Dividends. These are sums of money divided amongst Shareholders of a Limited Company out of its Profits after taking into account tax on the company.