How to Create a Simple Financial Record-Keeping System
The simpler the financial record-keeping system, the easier it is to follow. A double-entry accounting system works well for medium to large businesses because it accurately calculates profit/loss and assets/liabilities. It also illustrates that assets equal liabilities plus owner's equity. However, a single-entry accounting system, useful for smaller businesses or tracking personal income and expenses, works well too. As long as things are recorded correctly, everything should balance out.
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Instructions
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Double-Entry Financial Record-Keeping
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1
Create a table of four columns and 10 rows. Type "Date" in the first cell of the first row of the first column. Type "Accounts" in the first cell of the first row of the second column. Type "Debit" in the first cell of the first row of the third column. Type "Credit" in the first cell of the first row of the fourth column.
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2
Enter the transaction information, including the "Date" and account "Description" (what the debit or credit applies to), by placing the amount of the transaction in either the "Debit" or "Credit" column. Add more rows, if needed. Each debit transaction must have an opposite credit transaction. For example, if you extended a customer credit, you would enter "Accounts Receivables" as the "Description," and the amount would be entered in the "Debit" column. To match this, when the customer has paid, the amount is entered in the "Credit" column with "Revenues" as the "Description" of the account to which the funds were credited. The sum of all debit transactions must equal the sum of all credits transactions to balance out.
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3
At the beginning of the following month, tally all "Debits" and "Credits" for the previous month.
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4
Print and copy the form, and file it with copies of corresponding receipts for that month.
Single-Entry Financial Record-Keeping System
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5
Create a table of four columns and 10 rows. Type "Date" in the first cell of the first row of the first column. Type Description" in the first cell of the first row of the second column. Type "Revenues" in the first cell of the first row of the third column. Type "Expenses" in the first cell of the first row of the fourth column.
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6
Enter the transaction information, including the "Date," "Description," "Revenues" earned and "Expenses" paid in the appropriate columns. Add more rows, if needed.
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7
At the beginning of the following month, tally all "Revenues" and "Expenses" for the previous month.
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8
Copy the form, and file it with copies of corresponding receipts for the month.
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Tips & Warnings
Create a fifth column for adding notes about revenues and expenses or debits and credits.
If you use accounting software, copy your receipts and file them along with a printout of the month's financial record-keeping log.
Record-keeping is meaningless without supporting documentation. Keep copies of sales via receipts, credit-card-paid confirmation notices, bank statements, emails and other data. Place all these items in a safe and secure place.
