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Bookkeeping For Dummies, 2nd Edition

Book Description

The fast and easy way to master the art of bookkeeping

If you're a business owner or an employee who manages finances, the latest edition of Bookkeeping For Dummies is for you. This handy guide gives you clear and concise information on how to keep track of accounts, prepare balance sheets, organize ledgers or journals, create financial statements, and so much more. Packed with the most up-to-date bookkeeping practices, tax information, and small-business laws, Bookkeeping For Dummies is an accessible, invaluable resource you'll turn to again and again.

Accurate and complete bookkeeping is crucial to any -business owner—but jumping in headfirst without knowing your accounts from your balance sheets can confuse even the most astute businessperson. That's where Bookkeeping For Dummies helps! Written in the familiar and friendly tone that has defined the For Dummies brand for more than twenty years, this clear and comprehensive guide covers everything you'll encounter as you set out to tackle your company's books, ensuring you're on the right track and saving you tons of headaches along the way. So what are you waiting for? It's time to hit the books!

  • Offers easy-to-follow instructions to keep track of your business' financial well-being

  • Covers managing assets and liabilities

  • Includes updated QuickBooks screenshots and Excel spreadsheets

  • Provides guidance on producing balance sheets and creating financial statements

  • Whether you're just starting out with bookkeeping—or a bookkeeper who needs to brush up on your skills—Bookkeeping For Dummies sets you up for success.

    Table of Contents

      1. Introduction
        1. About This Book
        2. Foolish Assumptions
        3. Icons Used in This Book
        4. Beyond the Book
        5. Where to Go From Here
      2. Part I: Basic Bookkeeping: Why You Need It
        1. Chapter 1: So You Want to Do the Books
          1. Delving into Bookkeeping Basics
            1. Picking your accounting method
            2. Understanding assets, liabilities, and equity
            3. Introducing debits and credits
            4. Charting your bookkeeping course
          2. Recognizing the Importance of an Accurate Paper Trail
            1. Maintaining a ledger
            2. Keeping journals
            3. Computerizing
            4. Instituting internal controls
          3. Using Bookkeeping’s Tools to Manage Daily Finances
            1. Maintaining inventory
            2. Tracking sales
            3. Handling payroll
          4. Running Tests for Accuracy
            1. Proving out your cash
            2. Testing your balance
            3. Doing bookkeeping corrections
          5. Finally Showing Off Your Financial Success
            1. Preparing financial reports
            2. Paying taxes
        2. Chapter 2: Getting Down to Bookkeeping Basics
          1. Bookkeepers: The Record Keepers of the Business World
          2. Wading through Basic Bookkeeping Lingo
            1. Accounts for the balance sheet
            2. Accounts for the income statement
            3. Other common terms
          3. Pedaling through the Accounting Cycle
          4. Tackling the Big Decision: Cash-basis or Accrual Accounting
            1. Waiting for funds with cash-basis accounting
            2. Recording right away with accrual accounting
          5. Seeing Double with Double-Entry Bookkeeping
          6. Differentiating Debits and Credits
        3. Chapter 3: Outlining Your Financial Road Map with a Chart of Accounts
          1. Getting to Know the Chart of Accounts
          2. Starting with the Balance Sheet Accounts
            1. Tackling assets
            2. Laying out your liabilities
            3. Eyeing the equity
          3. Tracking the Income Statement Accounts
            1. Recording the money you make
            2. Tracking the Cost of Sales
            3. Acknowledging the money you spend
          4. Setting Up Your Chart of Accounts
      3. Part II: Keeping a Paper Trail
        1. Chapter 4: Ledgers: A One-Stop Summary of Your Business Transactions
          1. The Eyes and Ears of a Business
          2. Developing Entries for the Ledger
          3. Posting Entries to the Ledger
          4. Adjusting for Ledger Errors
          5. Using Computerized Transactions to Post and Adjust in the General Ledger
        2. Chapter 5: Keeping Journals
          1. Establishing a Transaction’s Point of Entry
          2. When Cash Changes Hands
            1. Keeping track of incoming cash
            2. Following outgoing cash
          3. Managing Sales Like a Pro
          4. Keeping Track of Purchases
          5. Dealing with Transactions that Don’t Fit
          6. Posting Journal Information to Accounts
          7. Simplifying Your Journaling with Computerized Accounting
        3. Chapter 6: Computer Options for Your Bookkeeping
          1. Surveying Your Software Options
            1. Bookkeeper 2014
            2. Sage 50 Pro
            3. QuickBooks Pro
          2. Setting Up Your Computerized Books
            1. Customizing software to match your operations
            2. Converting your manual bookkeeping to a computerized system
        4. Chapter 7: Controlling Your Books, Your Records, and Your Money
          1. Putting Controls on Your Business’s Cash
            1. Checking accounts
            2. Savings accounts
            3. Petty cash accounts
            4. Cash registers
          2. Keeping the Right Paperwork
            1. Creating a filing system
            2. Figuring out what to keep and for how long
          3. Protecting Your Business Against Internal Fraud
            1. Facing the reality of financial fraud
            2. Dividing staff responsibilities
            3. Balancing control costs
          4. Insuring Your Cash through Employee Bonding
      4. Part III: Tracking Your Day-to-Day Operations with Your Books
        1. Chapter 8: Buying and Tracking Your Purchases
          1. Keeping Track of Inventory
            1. Entering initial cost
            2. Managing inventory and its value
          2. Buying and Monitoring Supplies
          3. Staying on Top of Your Bills
        2. Chapter 9: Counting Your Sales
          1. Collecting on Cash Sales
            1. Discovering the value of sales receipts
            2. Recording cash transactions in the books
          2. Selling on Credit
            1. Deciding whether to offer store credit
            2. Recording store credit transactions in the books
          3. Proving Out the Cash Register
          4. Tracking Sales Discounts
          5. Recording Sales Returns and Allowances
          6. Monitoring Accounts Receivable
          7. Accepting Your Losses
        3. Chapter 10: Employee Payroll and Benefits
          1. Staffing Your Business
            1. Completing government forms
            2. Picking pay periods
            3. Determining wage and salary types
          2. Collecting Employee Taxes
            1. Sorting out Social Security tax
            2. Making sense of Medicare tax
            3. Figuring out federal withholding tax
            4. Settling up state and local withholding taxes
          3. Determining Net Pay
          4. Surveying Your Benefits Options
            1. Tax-exempt benefits
            2. Taxable benefits
            3. Dealing with cafeteria plans
          5. Preparing Payroll and Posting It in the Books
            1. Calculating payroll for hourly employees
            2. Doling out funds to salaried employees
            3. Totaling up for commission checks
          6. Depositing Employee Taxes
          7. Outsourcing Payroll and Benefits Work
        4. Chapter 11: Employer-Paid Taxes and Government Payroll Reporting
          1. Paying Employer Taxes on Social Security and Medicare
            1. Filing Form 941
            2. Knowing how often to file
          2. Completing Unemployment Reports and Paying Unemployment Taxes
            1. How states calculate the FUTA tax rate
            2. Calculating FUTA tax
            3. Filing and paying unemployment taxes to state governments
          3. Carrying Workers’ Compensation Insurance
          4. Maintaining Employee Records
      5. Part IV: Preparing the Books for Year’s (or Month’s) End
        1. Chapter 12: Depreciating Your Assets
          1. Defining Depreciation
            1. Knowing what you can and can’t depreciate
            2. Figuring out the useful life of a fixed asset
            3. Delving into cost basis
          2. Reducing the Value of Assets
            1. Evaluating your depreciation options
          3. Tackling Taxes and Depreciation
            1. Section 179
            2. MACRS
          4. Setting Up Depreciation Schedules
          5. Recording Depreciation Expenses
        2. Chapter 13: Paying and Collecting Interest
          1. Deciphering Types of Interest
            1. Simple interest
            2. Compound interest
          2. Handling Interest Income
          3. Delving into Loans and Interest Expenses
            1. Short-term debt
            2. Long-term debt
        3. Chapter 14: Proving Out the Cash
          1. Why Prove Out the Books?
          2. Making Sure Ending Cash Is Right
          3. Closing the Cash Journals
            1. Finalizing cash receipts
            2. Finalizing cash outlays
          4. Using a Temporary Posting Journal
          5. Reconciling Bank Accounts
            1. Tracking down errors
            2. Using a computerized system
          6. Posting Adjustments and Corrections
        4. Chapter 15: Closing the Journals
          1. Prepping to Close: Checking for Accuracy and Tallying Things Up
            1. Paying attention to initial transaction details
            2. Summarizing journal entries
            3. Analyzing summary results
            4. Planning for cash flow
          2. Posting to the General Ledger
          3. Checking Out Computerized Journal Records
        5. Chapter 16: Checking Your Accuracy — By Trial and Hopefully No Error
          1. Working with a Trial Balance
            1. Conducting your trial balance
            2. Dealing with trial balance errors
          2. Testing Your Balance Using Computerized Accounting Systems
          3. Developing a Financial Statement Worksheet
          4. Replacing Worksheets with Computerized Reports
        6. Chapter 17: Adjusting the Books
          1. Adjusting All the Right Areas
            1. Depreciating assets
            2. Allocating prepaid expenses
            3. Counting inventory
            4. Allowing for bad debts
            5. Recognizing unpaid salaries and wages
          2. Testing Out an Adjusted Trial Balance
          3. Changing Your Chart of Accounts
      6. Part V: Reporting Results and Starting Over
        1. Chapter 18: Developing a Balance Sheet
          1. What Is a Balance Sheet?
          2. Gathering Balance Sheet Ingredients
            1. Dividing and listing your assets
            2. Acknowledging your debts
          3. Ta Da! Pulling Together the Final Balance Sheet
            1. Account format
            2. Report format
            3. Financial Position format
          4. Putting Your Balance Sheet to Work
            1. Testing your cash
            2. Assessing your debt
          5. Generating Balance Sheets Electronically
        2. Chapter 19: Producing an Income Statement
          1. What Is an Income Statement?
          2. Formatting the Income Statement
          3. Preparing the Income Statement
            1. Finding Net Sales
            2. Finding Cost of Goods Sold
            3. Drawing remaining amounts from your worksheet
            4. Gauging your Cost of Goods Sold
          4. Deciphering Gross Profit
          5. Monitoring Expenses
          6. Using the Income Statement to Make Business Decisions
          7. Testing Profits
            1. Return on Sales
            2. Return on Assets
            3. Return on Equity
          8. Branching Out with Income Statement Data
        3. Chapter 20: Completing Year-End Payroll and Reports
          1. Year-End Employee Reporting
            1. Filing W-2s
            2. Sending in wage reports
          2. Producing 1099s for Vendors and Contractors
          3. Filing Year-End Summaries
        4. Chapter 21: Satisfying the Tax Man
          1. Finding the Right Business Type
            1. Sole proprietorship
            2. Partnership
            3. Limited Liability Companies (LLCs)
            4. Corporations
          2. Tax Reporting for Sole Proprietors
          3. Filing Tax Forms for Partnerships
          4. Paying Corporate Taxes
            1. Reporting for an S corporation
            2. Reporting for a C corporation
          5. Taking Care of Sales Taxes Obligations
        5. Chapter 22: Prepping the Books for a New Accounting Cycle
          1. Finalizing the General Ledger
            1. Zeroing out income statement accounts
            2. Carrying over balance sheet accounts
          2. Conducting Special Year-End Bookkeeping Tasks
            1. Checking customer accounts
            2. Assessing vendor accounts
            3. Deleting accounts
          3. Starting the Cycle Anew
      7. Part VI: The Part of Tens
        1. Chapter 23: Top Ten Ways to Manage Your Business Cash with Your Books
          1. Charting the Way
          2. Balancing Your Entries
          3. Posting Your Transactions
          4. Tracking Customer Collections
          5. Paying Bills Accurately and On Time
          6. Planning Profits
          7. Comparing Budget to Actual Expenses
          8. Comparing Sales Goals to Actual Sales
          9. Tracking Cost Trends
          10. Making Pricing Decisions
        2. Chapter 24: Top Ten Most Important Accounts for Any Bookkeeper
          1. Cash
          2. Accounts Receivable
          3. Inventory
          4. Accounts Payable
          5. Loans Payable
          6. Sales
          7. Purchases
          8. Payroll Expenses
          9. Office Expenses
          10. Owner’s Equity
          11. Retained Earnings
      8. Appendix: Glossary
      9. About the Author
      10. Cheat Sheet