Description
Some of the information in this presentation is complicated and generally takes more than one day to learn. The best way to learn it is through practice using a work book and real-life examples.
basic financial management & bookkeeping
Administrator
Nicole Roach
Marketing Coordinator
BizCentral USA
Key Speaker
Andrea Root
Accounting Coordinator
BizCentral USA
A Webinar By:
Agenda
I. Getting Started
II. Process
III. Financial Reporting Tools
IV. Solutions
V. Conclusion
VI. Questions
Forward
• Some of the information in this presentation is
complicated and generally takes more than
one day to learn. The best way to learn it is
through practice using a work book and real-life
examples.
• We recommend consulting a professional before
making any big financial decisions or changes
Getting Started
Getting Started: Key Terms
• Bookkeeping – basic recording of various
financial transactions.
• Asset – something you currently, or will own in the
future.
• Liability – something you owe to someone else.
• Accounts receivable – money owed by
customers.
• Accounts payable – money owed to others.
Key Terms
• Cash flow – a revenue or expense stream
• Cash receipt – cash received
• Cash disbursement – cash paid
• Revenue – all incoming money
• Expenses- all outgoing money
Key Terms
• Profit/Surplus – when revenue minus expenses
results in a positive number
• Deficit – expenditures were greater than
revenues
• Net – total before deductions
• Gross- total after deductions
Process
Process: Basics
• There are two ways to do this:
– Cash basis
– Accrual basis.
• The greatest difference between the two is
how you record transactions.
Process: Posting Your Transactions
• There are several ways to keep track of your
financial records.
• I’ll give you a high-level overview of two
methods:
1. Single entry
2. Double entry
Process: Single Entry
• There are two alternatives for the single entry
method:
Date Description Amount
11/2/09 Beginning Balance $1,000.00
11/3/09 Purchased Office Supplies ($100.00)
11/5/09 Performed Repair Service $250.00
11/30/09 Ending Balance $1,025.00
Date Description Revenue Expense
11/5/09 Performed Repair Service $250.00
11/15/09 Paid Electric Bill ($125.00)
November Totals $250.00 $225.00
Process: Double Entry
• The double entry method is the preferred
method of recording transactions.
• This method may seem complicated at first, but
it will make things easier in the long run.
• When done correctly, your books will always
balance
Double Entry
• Every transaction has equal debit and credit
entries
? Debits reflect:
– Increase in assets
– Decrease in liabilities
– Decrease profit
(expense)
? Credits reflect
– Increase in liabilities
– Decrease in assets
– Increase profit
(income)
Date Accounts Debit Credit
11/2/09 Cash $250.00
Product Sales $250.00
11/3/09 Electricity $125.00
Cash $125.00
Financial Reporting Tools
Budget
• Budgets are important tools that can be used
to create comparisons, analyses, and help
manage your organization
• Budgets are changeable
• If your organization's actual revenues and
expenditures are widely different from your
budget, you need to determine the reason
for the differences
Financial Statements
• A variety of financial statements and reports
can be derived from bookkeeping information
• You should become very familiar with these
documents
• You will likely see three primary reports amongst
others
– Profit and Loss Statement
– Balance Sheet
– Cash Flow Statements
Profit and Loss Statement
• Shows changes in assets throughout the year
• Reflects if an organization is operating with a
surplus or deficit
• Highlights areas of concern
• Is typically required for loans
Balance Sheet
• Shows the overall value of your organization
• Shows total assets, subtracts total liabilities, and
reports net assets
• Generally reviewed at year end
• Banks or accountants may ask for this
document.
Cash Flow Statement
• Provides information about all cash inflows and
outflows from operations and investments
• Shows changes in cash throughout a given time
period (quarter or year)
• It is important to know how much cash your
organization has
Solutions
Manual Record Keeping
• Advantages:
– You can organize the information using your own
system
– You will gain a better understanding of the
process and it can be an excellent learning
experience
• Disadvantages:
– There is a lot of room for error
– You need to be highly organized and stay on
top of the process
– Your accountant may not understand your
system
– Can be very time consuming and stressful
Computer Based Record Keeping
• Advantages:
– Makes entries easier and quicker
– Automatically updates ledgers
– Easily creates financial reports
• Disadvantages:
– You may not understand how the
accounting process really works
– You may become less diligent about keeping
records
– Software can be expensive and may take
time to learn
Outsourcing
Advantages:
• Create and manage your income and expenses
• Handle all of your federal and state report forms
• Handle your key documents
• Create Reports
• Ensure compliance with regulations & industry
standards
• Decreases opportunity cost of time spent
supervising, training, & correcting records, entries,
and other flaws
Outsourcing
Disadvantages:
• You are removed from the process
• You may not understand how the accounting
process really works
• This can become costly (but doesn’t have to!)
Conclusion
Conclusion
• Financial management is necessary for every
organization
• Several methods can be used to fulfill common
tasks and reach common goals
• Financial management can be complex,
although with the right knowledge, resources,
and tools, it doesn’t need to be stressful, or
overly expensive
• Consult a professional if you have concerns
about your organization's finances
Don’t Go At It Alone!
• BizCentral Small Business Services
• Business Plan Writing
• Business Certifications
• Incorporation
• Website Development
• Graphic Design
• Marketing
• Bookkeeping & Accounting
• Nonprofit Services
Special Promotion
Upcoming Webinars
• Using & Updating Your
Business Plan:
• 6-29-2010 3pm EST
doc_261152501.pptx
Some of the information in this presentation is complicated and generally takes more than one day to learn. The best way to learn it is through practice using a work book and real-life examples.
basic financial management & bookkeeping
Administrator
Nicole Roach
Marketing Coordinator
BizCentral USA
Key Speaker
Andrea Root
Accounting Coordinator
BizCentral USA
A Webinar By:
Agenda
I. Getting Started
II. Process
III. Financial Reporting Tools
IV. Solutions
V. Conclusion
VI. Questions
Forward
• Some of the information in this presentation is
complicated and generally takes more than
one day to learn. The best way to learn it is
through practice using a work book and real-life
examples.
• We recommend consulting a professional before
making any big financial decisions or changes
Getting Started
Getting Started: Key Terms
• Bookkeeping – basic recording of various
financial transactions.
• Asset – something you currently, or will own in the
future.
• Liability – something you owe to someone else.
• Accounts receivable – money owed by
customers.
• Accounts payable – money owed to others.
Key Terms
• Cash flow – a revenue or expense stream
• Cash receipt – cash received
• Cash disbursement – cash paid
• Revenue – all incoming money
• Expenses- all outgoing money
Key Terms
• Profit/Surplus – when revenue minus expenses
results in a positive number
• Deficit – expenditures were greater than
revenues
• Net – total before deductions
• Gross- total after deductions
Process
Process: Basics
• There are two ways to do this:
– Cash basis
– Accrual basis.
• The greatest difference between the two is
how you record transactions.
Process: Posting Your Transactions
• There are several ways to keep track of your
financial records.
• I’ll give you a high-level overview of two
methods:
1. Single entry
2. Double entry
Process: Single Entry
• There are two alternatives for the single entry
method:
Date Description Amount
11/2/09 Beginning Balance $1,000.00
11/3/09 Purchased Office Supplies ($100.00)
11/5/09 Performed Repair Service $250.00
11/30/09 Ending Balance $1,025.00
Date Description Revenue Expense
11/5/09 Performed Repair Service $250.00
11/15/09 Paid Electric Bill ($125.00)
November Totals $250.00 $225.00
Process: Double Entry
• The double entry method is the preferred
method of recording transactions.
• This method may seem complicated at first, but
it will make things easier in the long run.
• When done correctly, your books will always
balance
Double Entry
• Every transaction has equal debit and credit
entries
? Debits reflect:
– Increase in assets
– Decrease in liabilities
– Decrease profit
(expense)
? Credits reflect
– Increase in liabilities
– Decrease in assets
– Increase profit
(income)
Date Accounts Debit Credit
11/2/09 Cash $250.00
Product Sales $250.00
11/3/09 Electricity $125.00
Cash $125.00
Financial Reporting Tools
Budget
• Budgets are important tools that can be used
to create comparisons, analyses, and help
manage your organization
• Budgets are changeable
• If your organization's actual revenues and
expenditures are widely different from your
budget, you need to determine the reason
for the differences
Financial Statements
• A variety of financial statements and reports
can be derived from bookkeeping information
• You should become very familiar with these
documents
• You will likely see three primary reports amongst
others
– Profit and Loss Statement
– Balance Sheet
– Cash Flow Statements
Profit and Loss Statement
• Shows changes in assets throughout the year
• Reflects if an organization is operating with a
surplus or deficit
• Highlights areas of concern
• Is typically required for loans
Balance Sheet
• Shows the overall value of your organization
• Shows total assets, subtracts total liabilities, and
reports net assets
• Generally reviewed at year end
• Banks or accountants may ask for this
document.
Cash Flow Statement
• Provides information about all cash inflows and
outflows from operations and investments
• Shows changes in cash throughout a given time
period (quarter or year)
• It is important to know how much cash your
organization has
Solutions
Manual Record Keeping
• Advantages:
– You can organize the information using your own
system
– You will gain a better understanding of the
process and it can be an excellent learning
experience
• Disadvantages:
– There is a lot of room for error
– You need to be highly organized and stay on
top of the process
– Your accountant may not understand your
system
– Can be very time consuming and stressful
Computer Based Record Keeping
• Advantages:
– Makes entries easier and quicker
– Automatically updates ledgers
– Easily creates financial reports
• Disadvantages:
– You may not understand how the
accounting process really works
– You may become less diligent about keeping
records
– Software can be expensive and may take
time to learn
Outsourcing
Advantages:
• Create and manage your income and expenses
• Handle all of your federal and state report forms
• Handle your key documents
• Create Reports
• Ensure compliance with regulations & industry
standards
• Decreases opportunity cost of time spent
supervising, training, & correcting records, entries,
and other flaws
Outsourcing
Disadvantages:
• You are removed from the process
• You may not understand how the accounting
process really works
• This can become costly (but doesn’t have to!)
Conclusion
Conclusion
• Financial management is necessary for every
organization
• Several methods can be used to fulfill common
tasks and reach common goals
• Financial management can be complex,
although with the right knowledge, resources,
and tools, it doesn’t need to be stressful, or
overly expensive
• Consult a professional if you have concerns
about your organization's finances
Don’t Go At It Alone!
• BizCentral Small Business Services
• Business Plan Writing
• Business Certifications
• Incorporation
• Website Development
• Graphic Design
• Marketing
• Bookkeeping & Accounting
• Nonprofit Services
Special Promotion
Upcoming Webinars
• Using & Updating Your
Business Plan:
• 6-29-2010 3pm EST
doc_261152501.pptx