Time Tracer Ltd - Publishing

ACCOUNTING INSIGHT

2nd Edition by Edwin Olima FCCA

ISBN 0-9543820-1-3

 

 

 

 

 

 

 

 

 

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In this book we have kept things relatively simple. The concepts however can be applied to many businesses. In addition, sales, purchases and bank transactions  comprise over ninety percent of business transactions.  So you now understand how to account for over ninety percent of the transactions of a business. The remaining ten percent or so of transactions may need the advice of an accountant.

 

Using Accounting Software

Accounting software allows you to do all that you have done in this book. The work pack in this book is excellent practice material for learning how to use accounting software packages. You may enter your sales and purchase invoices  using a computer screen form that allows line by line entry as you did in Chapter 1 & Chapter 2 . Or you may enter the details using a computer screen form that actually looks like an invoice. You then fill in the details of this virtual invoice with the details of an actual invoice.  Once you save the virtual invoice a fresh one pops up allowing you to enter the next invoice.

 

Accounting software should allow you to enter and match bank receipts  from customers  to the sales invoices  and also payments to suppliers  to their purchase invoices  thus updating your trade debtor  and trade creditor  balances as well as your bank account at the same time.

 

Other bank transactions  can be entered line by line via a computer screen form into the bank account or through a computer screen form that looks like a bank cheque or bank pay in slip. Again, once you have entered and saved the detail of one cheque or pay-in slip a fresh form pops up for the next one. The software should also allow you make journals with a special computer journal form.

Payroll software  can be purchased as an added feature for your accounting software. This is useful where you have many employees .

 

The main advantage of accounting software is that you can get instant reports of your debtors , creditors  and bank balances. In addition reports on VAT , the profitability and wealth of the business are also instant. Thus saving compilation time. Some time is saved on data entry since repetition of certain data items may be avoided (e.g. client name, product name & description etc).

 

Caution: It is the experience of most accountants that accounting software that is not used properly is of little help in compiling statutory accounts as it takes a lot of time finding out where the errors have been made and correcting them. So if you do purchase software ensure that you also get proper training on how to use it. This training will last you a lifetime and save a lot of time and aggravation for you and your accountant.

 

Complex Transactions

Businesses now enter into complicated deals of financing, factoring of debts, hire purchase, etc and in these cases the advice of your accountant is invaluable in getting the accounting right and not forgetting tax planning.

 

Complex Businesses

Certain types of business like construction, manufacturing, to name but a few have special accounting needs and an accountant is necessary here.

 

Further Help

Your accountant is a good source of help as they can use all their experience/knowledge and also be more specific to your needs. Other accountancy books can provide you with some further information on accounting issues and if studied conscientiously they will increase your knowledge of accountancy.

   

Consolidating Your Knowledge PRACTICE, PRACTICE, PRACTICE!

It is worth doing the exercises in this book at least three times over a period of say three months so that you have a good recall of the essentials of financial accounting. You have done the first round make a note to do the second round (about 6 hours or less will be needed) and the third round (about 4 hours will be required).

 

Value Your Skill and/or Time at up to 25,000 per year!

Finally, by timing yourself you can find out how many transactions you can process per minute. If you charge 0.50 per transaction and can process 1 transaction every two minutes you can earn 15.00 per hour which translates to turnover of 25,200 per year (working 35 hours per week for 48 weeks a year)! The faster you are, the higher your earnings per hour.


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