RECORD-KEEPING AND ACCOUNTING Entrepreneurship 5/7/2018 Chapter 11 RECORD-KEEPING AND ACCOUNTING 11.1 Set Up a Record-Keeping System 11.2 Understand Basic Accounting 11.3 Track Your Inventory Chapter 11

Lesson 11.1 SET UP A RECORD-KEEPING SYSTEM Chapter 11 Lesson 11.1 SET UP A RECORD-KEEPING SYSTEM GOALS Keep journals, ledgers, and other types of important business records. Learn about electronic record-keeping.

TYPES OF RECORDS Journals Ledgers Bank statements Payroll records Chapter 11 TYPES OF RECORDS Journals Ledgers Bank statements Payroll records Tax records

Chapter 11 JOURNALS Are accounting record of the transactions you make. Journals separate business transactions by account Sales journal Used to record only sales of merchandise on account. Get now pay later. Cash payments journal Used to record any Cash or check payments that a business makes. Cash receipts journal Used to record all cash receipts transactions. Purchases journal Used to record purchases of merchandise on account. General journal This is used to record any kind of transactions. Some busineeses use only GL.

Chapter 11 LEDGERS Businesses use general ledgers to which they post the items that they record in their journals. Ledgers separate transactions by account. Ex. Expenses (rent, utilities) Subsidiary ledgers Is a ledger that is summarized in a single general ledger account. Aging tables Is a record-keeping tool for tracking accounts receivable accounts. Ex. p273

Chapter 11 BANK STATEMENTS A check register is a book in which you record the dates, amounts, and names of people or businesses to whom you have written checks.

Chapter 11 PAYROLL RECORDS A payroll is a list of people who receive salary or wage payments from a business. A payroll register includes the following information: Employee’s name Number of hours worked Regular and overtime earnings Federal, state, and local taxes deducted Social security and Medicare contributions deducted Other deductions

TAX RECORDS Income tax Payroll deductions Sales tax Chapter 11 TAX RECORDS Income tax Business that earn profit must pay income tax. These taxes are paid quarterly ( every 3 months) Payroll deductions Sales tax

COMPUTERIZED RECORD-KEEPING Chapter 11 COMPUTERIZED RECORD-KEEPING Advantages of computerized record-keeping Store and analyze data Link records - sale, Income statement and Inventory Reduce errors - Correct errors Disadvantages of computerized record-keeping Staff resistance Unauthorized access Computer problems

Lesson 11.2 UNDERSTAND BASIC ACCOUNTING Chapter 11 Lesson 11.2 UNDERSTAND BASIC ACCOUNTING GOALS Demonstrate understanding of balance sheets, income statements, and cash flow statements. Determine whether you need a professional to help you with your record-keeping and accounting.

TYPES OF FINANCIAL STATEMENTS Chapter 11 TYPES OF FINANCIAL STATEMENTS The balance sheet The income statement The cash flow statement

Chapter 11 THE BALANCE SHEET A balance sheet lists what a business owns, what it owes, and how much it is worth at a particular point in time. Assets = Liabilities + Owner’s equity

THE INCOME STATEMENT Revenue Cost of goods sold Operating expenses Chapter 11 THE INCOME STATEMENT Revenue Cost of goods sold Operating expenses Net profit before taxes

THE CASH FLOW STATEMENT Chapter 11 THE CASH FLOW STATEMENT Net cash flow is the difference between cash receipts and disbursements. Cash receipts – Disbursements = Net cash flow Positive or negative cash flow Economic effects on cash flow

USE PROFESSIONALS Accounting assistants Certified public accountant Chapter 11 USE PROFESSIONALS Accounting assistants Certified public accountant

Lesson 11.3 TRACK YOUR INVENTORY Chapter 11 Lesson 11.3 TRACK YOUR INVENTORY GOALS Track your inventory using a perpetual inventory method and a periodic inventory method. Determine how much inventory to keep in stock.

TRACK YOUR INVENTORY Perpetual inventory method Chapter 11 TRACK YOUR INVENTORY Perpetual inventory method Take a physical inventory Periodic inventory method

MANAGE YOUR INVENTORY Costs of carrying inventory Chapter 11 MANAGE YOUR INVENTORY Costs of carrying inventory Obsolescence Deterioration Interest fees Insurance Storage Costs of being out of stock Turnover rates