For non limited companies that do not need to produce a balance sheet then a simple income and expenditure account can be produced much simpler using single entry bookkeeping principles. It is better to set up and group the analysis columns in general headings which can accommodate all the expenses. It is better not to enter too many items under a general heading of other expenses as this is more likely to be investigated as the type of expense has not been precisely identified. Using a spreadsheet for the bookkeeping has advantages as simple formula can be used to add up the column totals. If items like value added tax are required to be accounted for then an additional column would be required to accommodate the vat or sales tax accounting.software-designers-pro.
Accounting software is used by accountants to enter many complex financial transactions into the financial books of account and is almost invariably based upon double entry bookkeeping principles. The list should also produce an audit trail by showing the date of the purchase invoice, name of the supplier, purchase invoice for identification purposes and the total amount spent. The sales total is the sales turnover from which is deducted the totals of each of the expenditure classification totals with the result being the net profit and loss of the business.
To record sales income it would not normally be sufficient to simply add up the total of the invoices as such a summation does not leave an audit trail of the items which have been included.On the income and expenditure account adjust the stock purchases figure by adding the value of the opening stock and deducting the value of the closing stock. A major advantage to those companies and the finance staff is the extent to which financial information contained in the database can be queried for financial control purposes.Having set up two bookkeeping spreadsheets the task is then to produce the income and expenditure account by collecting the totals of each of the analysis columns. The expenditure analysis columns do not need to be a different column for each type of expenditure. Books are still required for tax purposes and a solid requirement of preparing a set of financial books for tax purposes is that each entry is supported by third party evidence.Less financial control is often required from small business accounting software as the bookkeeper is often the owner manager who already has an intimate knowledge of each transaction.
A further small complication might be if at the discretion of the small business owner additional information was required from the bookkeeping records to indicate the totals of the different types of products and services then additional columns could be incorporated to enter the net sales figures in these columns.
In the next column would be the total sales invoice amount. The result is not the stock purchases total as shown in the bookkeeping spreadsheets but the cost of the goods which have been sold to produce the sales turnover being reported.There it is then, a simple list of sales invoices to satisfy the sales accounting requirements for a small business where a balance sheet is Farm duty motors Manufacturers not required.Examples of third party evidence would be sales invoices, purchases invoices and bank statements.On the expenditure side of the business the bookkeeping can also be a simple list of the purchase invoices and receipts showing the amount spent.