| > | | | | an additional column would be required to |
| There is a major difference between sophisticated | | | | accommodate the vat or sales tax accounting. |
| accounting software used by larger businesses for | | | | A further small complication might be if at the |
| financial control purposes than is required for small | | | | discretion of the small business owner additional |
| business where a simple bookkeeping spreadsheet is | | | | information was required from the bookkeeping |
| sufficient. | | | | records to indicate the totals of the different types of |
| Accounting software is used by accountants to enter | | | | products and services then additional columns could be |
| many complex financial transactions and invariably | | | | incorporated to enter the net sales figures in these |
| based upon double entry bookkeeping principles. A | | | | columns. |
| major advantage to those companies and the finance | | | | There it is then, a simple list of sales invoices to satisfy |
| staff is the extent to which financial information | | | | the sales accounting requirements for a small business |
| contained in the database can be queried for financial | | | | where a balance sheet is not required. |
| control purposes. Simple bookkeeping spreadsheets | | | | On the expenditure side of the business the |
| are adequate for small business. | | | | bookkeeping can also be a simple list of the purchase |
| An accountant needs to not only ensure the financial | | | | invoices and receipts showing the amount spent. The |
| records are accurate but also retrieve any part of the | | | | list should also produce an audit trail by showing the |
| accounting records to answer accounting questions on | | | | date of the purchase invoice, name of the supplier, |
| the accounts, provide a legal basis for the transactions | | | | purchase invoice for identification purposes and the |
| and report the financial statements at regular periodic | | | | total amount spent. |
| intervals. | | | | Usually tax returns are the main purpose of producing |
| Accounting is a term that embodies a whole raft of | | | | small business accounts and invariably some analysis |
| financial activities while bookkeeping is specifically | | | | is required to show what the expenses have been |
| literally the keeping of books of account. For non limited | | | | spent on. That is not difficult to achieve and as with |
| companies that do not need to produce a balance | | | | the sales accounting the owner manager can add |
| sheet then a simple income and expenditure account | | | | additional standard columns to the bookkeeping |
| can be produced much simpler using single entry | | | | spreadsheet. |
| bookkeeping principles. | | | | The expenditure analysis columns do not need to be a |
| Less financial control is often required from small | | | | different column for each type of expenditure. Much |
| business accounting software as the bookkeeper is | | | | better to use a small number of general expense |
| often the owner manager who already has an intimate | | | | headings than dozens of detailed items as being on a |
| knowledge of each transaction. Books are still required | | | | spreadsheet all the data entered is visible anyway. |
| for tax purposes and a solid requirement of preparing | | | | These bookkeeping analysis columns would include |
| a set of financial books for tax purposes is that each | | | | stock, other direct costs, premises costs, general |
| entry is supported by third party evidence. | | | | administrative costs, transport and delivery costs, |
| Examples of third party evidence would be sales | | | | repairs and maintenance, travelling and hotel costs, |
| invoices, purchases invoices and bank statements. | | | | motor costs, bank and legal costs and other expenses. |
| Financial transactions where no receipt exists can still | | | | It is better not to enter too many items under a general |
| be entered in the business books although all | | | | heading of other expenses as this is more likely to be |
| transactions not carrying third party evidence could | | | | investigated as the type of expense has not been |
| subsequently be disallowed for tax purposes and | | | | precisely identified. |
| certainly would be if the amounts entered indicated | | | | One important column to also include is for asset |
| unusual income or expenditure. | | | | purchases as fixed assets usually have different tax |
| Producing an income and expenditure statement using | | | | rules applying to the claim of the expense against tax |
| single entry bookkeeping is little more than making two | | | | and should be separated from other expenditure. |
| lists of financial transactions. Those lists being one of | | | | Having set up two bookkeeping spreadsheets the task |
| sales income received from sales invoices or receipts | | | | is then to produce the income and expenditure |
| issued to customers and the other of purchase | | | | account by collecting the totals of each of the analysis |
| expenditure being from purchase invoices received | | | | columns. The sales total is the sales turnover from |
| from suppliers. | | | | which is deducted the totals of each of the |
| To record sales income it would not normally be | | | | expenditure classification totals with the result being the |
| sufficient to simply add up the total of the invoices as | | | | net profit and loss of the business. |
| such a summation does not leave an audit trail of the | | | | Where stock is bought and sold a further adjustment |
| items which have been included. A written list of sales | | | | may be required to account for the difference |
| invoices does provide an audit trail. | | | | between opening and closing stock. This is done by |
| Sales accounting for a small business accounting | | | | taking a physical stock check and valuing the stock at |
| purposes can be either a manual list of the sales | | | | the start and end of the financial period. |
| invoices or by using a spreadsheet package a list can | | | | On the income and expenditure account adjust the |
| be made on a bookkeeping spreadsheet. Basic | | | | stock purchases figure by adding the value of the |
| formulae canh be used to add up totals in a | | | | opening stock and deducting the value of the closing |
| bookkeeping spreadsheet. | | | | stock. The result is not the stock purchases total as |
| The bookkeeping entry for as sales invoice is basic. | | | | shown in the bookkeeping spreadsheets but the cost |
| Enter the date of the invoice, name of client, sales | | | | of the goods which have been sold to produce the |
| invoice number if applicable and optionally a very brief | | | | sales turnover being reported. |
| description of the product sold. In the next column | | | | Simple bookkeeping for a small business accounting |
| would be the total sales invoice amount. If items like | | | | purposes can be two lists of sales and purchases |
| value added tax are required to be accounted for then | | | | supported with sales invoices and purchases invoices. |