December 2017 - AccountingX

5670 Wilshire Blvd. Suite 1800 Los Angeles, CA 90036

2018 Accounting Tasks: EOY & The Morning After

2018 Accounting Tasks: EOY & The Morning After

With the new year finally here it’s time to start thinking about some different aspects of accounting that need to take place by certain deadlines. To make this easier we have put this great infographic together to ensure you know what accounting tasks to start with.  When it comes to accounting tasks staying on top of things makes your end of year so much easier but with the hustle and bustle throughout the year those tasks can fall behind and be put to the wayside until you actually have to do them.

With AccountingX that is no longer the case. if you don’t have time to do it or you don’t love doing it, outsource it! It not only saves you time and frustration but also allows you to focus on business growth in a whole new light. Making business decisions based on your financials saves a lot of money when you know what you have to work with. If you don’t know where you stand month after month it can be difficult to grow any organization.

Having a professional do your financials for you allows you to see exactly what you have coming in and what has gone out, it helps you and your team make better decisions for the success of the overall business at hand and helps lenders see if it’s worth investing in.

Accounting TasksFor more information on how you can outsource your accounting tasks contact us today!

The Plus and Minuses of Debits and Credits

The Plus and Minuses of Debits and Credits

 

Debits versus Credits

bookkeeping basics

Grasping the difference between debits and credits goes a long way toward  mastering bookkeeping basics. A debit increases an asset or expense account or decreases a liability or equity account. It goes in the left column. A credit increases a liability or equity account or decreases an asset or expense account. It goes in the right column.

 

Types of Accounts that Are Debits or Credits

For each business transaction created, there are entries for at least two accounts. A debit entry is posted to one account and a credit is posted to the other. Below, we cover the bookkeeping basics for how this works in balance sheet accounts and income statement accounts.

 

Balance Sheet Accounts

Here’s how the major balance sheet categories are impacted by this activity.

-Asset: Debit increase balances, but credits decrease balances.
-Liability: Debits decrease balances, but credits increase balances.
-Equity: Debits decrease balances, but credits increase the balances.

The double entry system supports the accounting equation, which governs all accounting transactions and accounting software.

Here is the equation: Assets = Liabilities + Equity

 

Income Statement Accounts

It’s equally important to be able to interpret how debits and credits impact income statement accounts. Otherwise, you won’t be able to read or produce the reporting required for your business.

-Revenue accounts. Debits decrease the balances, but credits increase the balances.
-Expense accounts. Debits increase the balances, but credits decrease the balances.
-Gain accounts. Debits decrease the balances, but credits increase the balances.
-Loss accounts. Debits increase the balances, but credits decrease the balances.

 

Why It’s So Important to Get It Right

The debits and credits for every business transaction recorded must be equal, or “in balance.” When there is a difference between total debits and total credits, this creates a discrepancy and the books are “out of balance.”

An out of balance system cannot be used to generate valid financial statements. Finding and correcting out of balance accounts takes a considerable amount of time and effort. Therefore, using debits and credits correctly in double-entry, or two-column accounting is the most important accounting control in ensuring accounting accuracy, and one of the essential tenets of bookkeeping basics.

For more information on how you can implement a professional to handle your business financials contact us today!

 

 

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