Accounting is a way of collating all of the information of the costs and profits of the business
To note and remind you as numbers and figures rather than relying on your memory
To know the cost details and help control costs
To know the profits and losses
To use the information in determining what the problems of the business are, and how they can be solved, whether you should continue that business or not.
To use as information and use the figures as a basis for future business planning
Account keeping, is keeping notes as a system and there are papers and receipts which explain the figures. This will help to keep accuracy
Before doing this, you need to know what are the income and expenditures
Income means money or things that equal money that come into the business
Expenditure means money or things equal to money which are paid out
In account keeping, you must remember that receive on the left, pay out on the right. Income will be recorded on the left, expenditures are recorded on the right, as shown in the following example.
Receivables |
Expenditures |
||||||
Date |
Income |
Amount |
Date |
Expenditure |
Amount |
||
1 |
2 |
3 |
|
4 |
5 |
6 |
|
Receivables
1. Date |
Record the date the money was received |
2. Income |
Record all income received, where it was received from, what for. |
3. Amount |
Record the amount of money received, as recorded in column 2 |
Expenditures
4. Date |
Record the date the money was paid |
5. Expenditure |
Record all expenditures made, who it was made too, what for. |
6. Amount |
Record all amounts of money paid, as recorded in column 5. |
Forms for account keeping include; account book, order form, invoice, receipt, returns form, advance form, return receipt form.
The account book is used to record the income and expenditures, profits and losses.
In the case of a group, one person should be selected to do the accounting. You should choose someone who has experience in accounting, or can read and write, then have someone teach them accounting.
In the case of a group who are members of the Credit Union, the group could have the treasurer do the accounts in the initial stages and have members practice.
Have the teacher or community leader do the account keeping in the initial stages, and have a member of the group practice and become the account keeper, then have the chairperson or committee member check the accounts. The group should not keep large amounts of money (accountants call this cash in hand). Money should be placed in the credit union or bank. In the case where the business expands, and has a lot of money, the person who is responsible for finances and the person responsible for accounting should be two people, so there can be inspections of the finances.