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Choosing an Accounts Package

I’ve recently been in the position of choosing accounting software, so this has been forefront of my mind.  This is a (by no means exhaustive) list of things to consider (in no particular order). 

price
functionality
ease of use/user friendliness
accounting knowledge
upgradeability
upgrade cost
ongoing support costs
flexibility
does it meet your legal obligations

Why use Accounting Software

The whole point of using accounting software is to make your life easier by saving you time and money.  Therefore, if it doesn’t and you can meet your legal requirements without it, you should question whether it’s worth the effort.
It should save you time because:

the whole process of bookkeeping should be faster (although setting up a [...]

Following the Trail of Journals

In doing a journal, it is important that it is cross referenced properly so that later, if you or your accountant needs to, you can follow the original “logic” for having done the journal.  Accountants refer to this as being able to follow the audit trail.  This applies whether or not you actually have your [...]

Correction of Errors using a Journal.

A journal is usually used to correct errors that have been made.  The errors must be able to be corrected by means of a double entry, to be able to put it right by journalling.
So, if £500 of sales of square widgets had been incorrectly posted to sales of round widgets, the correcting journal would [...]

Day Book Analysis and Journals

I’ve previously blogged about day books and analysing the sales or purchases into appropriate columns.  Depending on your business and grasp of accounting & bookkeeping, you might leave your record keeping at that.  However, to take it to the next step in terms of bookkeeping, a journal is used to take that analysis into the [...]

Journals

A journal is used to record any double entries that do not arise from anywhere else (such as sales, purchases, payroll).
The format of a journal is usually:
Date                                             Folio              Debit £   Credit £
Account to be debited                                          X
Account to be credited                                                         X

Accountants’ Jokes

Who says accountants are no fun?  Accountants jokes and fun is a blog collection of jokes for and about accountants, blogged by Mark Lee, an accountant himself (although no longer in practice).

Double Entry for a Credit Sale II

When the customer eventually pays, the second stage of double entry is as follows:
CASH ACCOUNT
Debit £200
DEBTORS ACCOUNT
Credit £200
Therefore, the two entries in the debtors account will eventually (hopefully!) cancel eachother out.  Since, in the first stage 9the actual sale), there was a debit of £200 and in the second stage (when payment is made), there [...]

Double Entry for a Credit Sale I

Not every business makes cash sales.  However, with a credit sale, there is no immediate entry in the Cash account, since no cash has actually changed hands.  Therefore, debtors accounts are used.  For example, if a business makes a credit sale for £200, the sale itself is accounted for as follows:
DEBTORS ACCOUNT
Debit £200
SALES ACCOUNT
Credit £200

Double Entry Accounting for a Cash Sale

Suppose a business makes a cash sale for £100, it’s double-entry accounting would be as follows:
CASH ACCOUNT
Debit £100
SALES ACCOUNT
Credit £100
This is because the cash asset increases by £100 (and an increase in an asset is a debit)
Note that the debits and credits for the cash account (ie the bank account) look back to front if [...]

T Accounts

 T accounts are what ledger accounts might look like if they were kept on paper (as opposed to using computer software). 
They are nothing mysterious, drawn on paper, a T account is quite literally a large T!  The title of the ledger (for example, “motor expenses” is written across the top), debit entries against that account are [...]