Bookkeeping Techniques
No business can survive for long without proper accounting. Depending on the size and complexity of a business, a single person -- in the smallest of businesses, often the actual owners -- may do all bookkeeping. More complex businesses may require the services of large departments, or outside accounting firms, to handle the books. All businesses use some common techniques in their accounting practices.
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Revenues
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Each individual stream of revenue -- cash, credit card, or bartered goods -- should be identified, no matter how small the transaction. Properly tracking revenues ensures that a business owner knows how much money is coming in, and from what source.
Expenses
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Business expenditures must be noted, just as revenue coming in must be tracked. A business owner who is spending more than he is taking in will not be in business for very long. A business owner may also note that certain branches of operations are less profitable than others and opt to divest of those, or close them outright, if expenses exceed revenues.
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Reconciliation
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Businesses of all size need to ensure that all deposits and expenses are faithfully recorded, then checked to ensure they reconcile. Once all deposits have been added and payments of expenses subtracted, the total should equal the amount shown on the current bank statement. Deposits made that have not yet shown up on the statement should be subtracted, and expenses not yet noted on the statement need to be added, to properly reconcile them with what shows as the bank balance Business owners should do this monthly, or more often if there are large numbers of transactions. Waiting too long to reconcile accounts can make the process difficult.
Financial Statement
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Financial statements are issued periodically in businesses where there are shareholders. These help investors understand how the business is doing how profitable it has been, why earnings do or don't measure up to expectations and future outlook for the business. Such statements are legal obligations for many businesses.
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References
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