The necessity of banking and banking accounts are discussed with examples of the consequences of not having them.
You may think that opening a bank account doesn’t rank high on your priority list. However, once you have committed yourself to starting up a business you will start to incur expenses and a business account chequebook would come in handy!
Cash is ready money in the bank or in the business. It is not inventory, it is not accounts receivable (what you are owed), and it is not property.
An accounting method/system is a set of rules used to determine when and how to report income and expenses in your books and on your income tax returns.
Income tax is the money you pay to government from your earnings to pay for roads, schools, hospitals etc. Income tax is paid on salaries and wages. If you earn more than a prescribed amount your employer must deduct tax money from your salary and wages each time you get paid. If you get paid weekly, then you pay tax every week.
Every business needs to be accountable to its members for the use of funds in the business. The members of the business place their trust in the executive that funds will be used in an honest way to achieve the goals of the business.
At the end of each month the accountant should record the information from all the petty cash vouchers into the petty cash book. You can use an ordinary school exercise book for the petty cash book. Make TWO columns on the right hand side of a page called INCOME and EXPENDITURE.
The balance sheet is one of the most important financial statements of a company. It is reported to investors at least once per year. It may also be presented quarterly, semi- annually or monthly.
The financial statement is the concise product of a detailed examination of a person’s financial situation which has two main purposes.