There are many other definitions that need to be clarified in order to demystify the topic of Book keeping. Identify at least five more terms that must be clarified for young people.
1. Double Entry Bookkeeping This is the standard in the industry and no matter where you go in the world the same theory will apply. The names might change, but the underlying concept will not. Debits and credits are almost an international language in themselves.A credit entry is always a negative amount. To credit an account means to enter a negative amount into that account. If the account is an Asset or Expense account a credit will decrease the balance of that account. If the account is a Liability, Capital, Profit and Loss, or Income account a credit will increase the balance of the account.Debit - A debit entry is always a positive amount. To debit an account means to enter a positive amount into that account. If the account is an Asset or Expense account a debit will increase the balance of that account. If the account is a Liability, Capital, Profit and Loss, or Income account a debit will decrease the balance of the account. 2.Financial Report/Balance SheetAll the transactional information that has been input has a purpose and you need to know what that output is. Having a basic understanding of what an income statement or a balance sheet is, is important. 3. Organizational Structures It is important to understand that there are different organization structures and they all have slightly different approaches to bookkeeping. A small family partnership is different to a listed company. They use the basics in slightly different ways. 4.Bookkeeping programs Do They Need Bookkeeping Programs In Their Business? Once upon a time, before bookkeeping programs were a common thing, all bookkeeping entries were done by hand. Large ledger books recorded the transactions of an organization. This was a time consuming exercise, and relied on having staff with excellent numeracy and accuracy skills. Today bookkeeping programs are commonplace in almost all organizations, from the largest multi-national down to the one man start up business. Their lower cost and increased efficiencies make them a practical addition to any business. When looking at bookkeeping programs youth need to be sure that it covers the areas their business needs, but is not too complex for their organization. Larger companies need programs that routinely handle complex multi currency and consolidation needs. A smaller business does not usually have that same need. At the same time they need to choose bookkeeping programs that will accommodate any growth or changes their business is likely to go through in its life-cycle. By evaluating their bookkeeping program needs they will end up paying an appropriate purchase price and ongoing maintenance costs. Advantages of Bookkeeping Programs One of the biggest advantages of good bookkeeping programs is that it reduces the need for manual calculations as long as the right data is input. They also build in checks and balances that reduce the likelihood of human error. From all this input and care, financial statements can be produced at the press of a button. This is a far cry from the manual processes associated with a hand written, manually calculated column totals of a paper based ledger system. Comprehensive bookkeeping programs will automatically populate all transactions through the appropriate ledgers. If an invoice is entered it will not only create the invoice, the dollar values should also be reflected in the General Ledger and Inventory modules, if you were using an inventory module. From this information your organization will have automated reporting – one click of the button and it should pop out. Different queries should be able to extract information you need for analysis or reporting purposes. And ideally you should be able to export this all to a spread-sheeting program if you want to do further number crunching.
5.Calendar Year - The 12 month period from January through December, as shown on a calendar