Did you ever have a lemonade stand when you were a kid? Many kids have plunged headlong into free enterprise by selling cool glasses of refreshment in front of their house. Accounting for lemonade stands was simple. All you needed to dowas to record sales. Mom furnished the materials and equipment necessary to make and sell the product and supplied a rent-free location to set up shop. She may have provided some cash to have available for making change.
As soon as one glass of lemonade was sold, you had a profit. No complicated accounting formulas to get in the way of the good times to come later at the five and dime store or, in more recent years, the mall.
Now fast forward 30 years. You have finished your MBA and you and a friend are successful in your field and are starting a business. Since Mom probably will not provide the entire inventory, equipment, and cash needed to begin production, you will need to record a lot more than just sales. You will need to record inventory purchases, capital expenditures, liabilities, general expenses, and sales. You also need to comply with a host of tax regulations related to the multiple jurisdictions that apply to your business.
To record the financial data, you can buy off-the-shelf accounting packages. Two of the more common packages are Peachtree Complete Accounting and QuickBooks Pro from Intuit. High-end customizable packages like Microsoft Dynamics GP and Microsoft Dynamics SL are ...