Bookkeeping 101 Keeping Track of Everything

1. Bookkeeping 101 Keeping Track of Everything

2. Double-entry bookkeeping Transactions – financial events Every transaction involves two kinds of accounts 1 account debited 1 account credited

3. 5 Categories of Accounts Assets – things of value Liabilities – what you owe Owner’s Equity/Retained Earnings – what you have left/ ownership

4. Also Income – money coming in Expenses – money going out Can have as many categories under each account as you want

5. Assets = Liabilities + Owner’s Equity Or Owner’s Equity = Assets - Liabilities Net Income =Revenue – Expenses (Profit) Net Income (Loss) Goes into Equity

6. Asset accounts: Cash = checking account Accounts Receivable = money owed to you Inventory of items for sale Supplies Equipment Land and Building

7. Liabilities Accounts Payable – money owed to vendors Taxes Payable Payroll Taxes Payable Loans Payable Mortgage Payable

8. Equity Accounts Owner’s Equity Owner’s Draw Owner’s Investment OR Retained Earnings (for corporation

9. Income Accounts Practice Income Adjustments Office Visits X-ray Less Refunds/Discounts Interest/Dividend Income Other Income

10. Expenses Advertising Bank charges Depreciation Interest on Mortgage Phone Professional Fees Rent Salaries/Wages Utilities

11. Balance Sheet as of [DATE] Assets Liabilities Owner’s Equity _______________________ Total Assets = Total Liabilities + Total OE

12. Income Statement (P&L) For period ending [DATE] Revenue [list] $500,000 Expenses [list] $400,000 ______________ Net Income $100,000

13. Net Income for period Affects Assets (Cash) And Owner’s Equity $100,000 increase in cash $100,000 increase in OE At end of period