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Small business means less mess in accounting is not a correct context. A business may look small but the mess can be huge in size. But, it is not hard to keep a close track on your expenses. In the following, there are 8 steps are described by following you can easily maintain your business and if you are an accountancy student this will give you some accounting homework help.
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Step 1: Develop Chart Of Accounts Of Your Business: When you start a small business, develop a chart of accounts as part of setting up your accounting and accounting system. The chart of accounts should be written in an indexed way for all the accounts where the company files its financial information. But, if you need more help you can always look for online accounting homework help.
Step 2: Always maintain the original or a copy of the source documents: A source document in an accounting transaction is evidence that proves that a transaction has occurred. It should be recorded as a journal entry as soon as possible, you made a transaction. Examples of source documents are canceled checks, invoices, purchase orders, and other business documents. For more help, you can always look for online accounting homework help services.
Step 3: Learn Accounting Journal Entries: When a business makes a financial transaction, they should make a journal entry in their accounting journal to record the transaction. If you are using dual entry accounting, you will make two entries: a debit from and a credit form for the appropriate accounts. For more help, you can always look for online accounting homework help services.
Step 4: Constructing a General Ledger: The general ledger is considered as the main accounting record for your business. All of the business's financial transactions are taken from the general accounting journal and should be recorded in the general ledger in a summary form. For more help, you can always look for online accounting homework help services.
Step 5: Preparation of Trial Balance: After you complete your general ledger entries for each accounting cycle, the next step is to prepare a trial balance. A trial balance is a process of totaling all the debits and credits from the general ledger to make sure they balance for the accounting period during an audit. For more help, you can always look for online accounting homework help services.
Step 6: Adjustments in the Entries of the Accounting Journals: Adjusting the entries is required in your accounting journals at the end of an accounting period. The purpose of adjusting entries is to adjust revenues and expenses or credits and debits to the accounting period in which they actually occurred. There are five types of adjusting entries in the accounting, which are accrued revenues, accrued expenses, prepaid expenses, and depreciation and all of these can have a significant impact on your monthly balance. For more help, you can always look for online accounting homework help services.
Step 7: Preparation of Financial Statements: In the accounting cycle, the preparation of financial statements is very important. The information from the accounting journal and the general ledger should be developed in the following way. At first the income statement, the statement of retained earnings, then balance sheet, and final statement of cash flows, in that order. Information from the previous statements is used to develop the next statement. For more help, you can always look for online accounting homework help services.
Step 8: Closing Entries of the Accounting Cycle: Closing entries journal entries made at the end of an accounting cycle to set the balance of temporary accounts to zero to begin the next accounting cycles. The accounts which are closed should be the revenue, expense, and drawing accounts. The assets, liabilities, and owner's equity accounts are not blocked because their ending balances are the beginning balances for the next accounting cycle. For more help, you can always look for online accounting homework help services.
