Included in this bookkeeping course

• Introduction to Bookkeeping
• The Accounting Equation and the Double Entry Bookkeeping System
• Journalizing
• Posting Transactions
• Prepare The Trial Balance
• Working Paper Preparation and Closing Entries
• The Income Statement
• The Balance Sheet
• The Cash Flow Statement

Description

EAA’s Bookkeeping Course provides a foundational understanding of bookkeeping and accounting principles, ideal for beginners and those looking to enhance their financial management skills.

The course covers the importance of bookkeeping, the accounting equation, and the double-entry system ensuring precise financial records. Students will master journalizing transactions, posting to ledger accounts, and compiling trial balances to check account accuracy.

The curriculum includes preparing working papers and closing entries, crafting income statements to assess profitability, and creating balance sheets for a financial snapshot. Additionally, the course explains the significance and preparation of cash flow statements, detailing cash inflows and outflows.

Learning Outcomes

Welcome to the first module of the self-paced bookkeeping course. This module serves as the foundational stone for aspiring bookkeepers and anyone interested in understanding the critical role of bookkeeping in the business world. Through this module, you will delve into the basics of bookkeeping, explore its relationship with accounting, and gain an understanding of the conceptual framework that underpins accounting practices. Additionally, you’ll get an overview of the bookkeeping process and familiarize yourself with essential bookkeeping terminology. By the end of this module, you will have a solid understanding of bookkeeping principles and be prepared to embark on a more detailed exploration of bookkeeping and accounting practices in the subsequent modules.

• Define Bookkeeping and its Importance: Understand what it is, its purpose, and why it is a crucial part of business operations.
• Distinguish Between Accounting and Bookkeeping: Identify the differences and interconnections between bookkeeping and accounting, understanding how they complement each other in the financial management of a business.
• Understand the Conceptual Framework of Accounting: Gain insights into the conceptual framework that guides accounting decisions and practices, laying the groundwork for both bookkeeping and accounting standards.
• Familiarize with the Bookkeeping Process: Obtain a clear overview of the bookkeeping process, including the steps and procedures involved in recording financial transactions.
• Learn Key Bookkeeping Terminology: Master the fundamental terminology used in bookkeeping, which is essential for recording, reporting, and analyzing financial transactions accurately.

By achieving these outcomes, you’ll establish a strong foundation in bookkeeping principles, setting the stage for more advanced topics and practical applications in the field.

Unit 1: What is Bookkeeping?

How many of your friends who are in business have received a letter of authority from the BIR? A letter of authority is a document that gives the Bureau of Internal Revenue or BIR the authority to audit your books. This should just be a routine activity, right?

Yes! It is the BIR’s mandate to collect the correct taxes from the taxpayers and thus have the authority to check whether you are remitting the correct taxes, or not.

Yes, it should just be a routine activity. Yes, there should be no problem. But let me qualify that. There should be no problem if you are keeping your books the right way. There should be no problem if the one doing your bookkeeping is competent enough to maintain your books without errors. Yes, there should be no problem if your bookkeeper is capable of computing the correct taxes payable by your business.

Now, you start seeing where the problem lies. Yes, the problem is not normally in accounting which just processes the information given by bookkeeping but in bookkeeping itself that processes and records the transactions in your books.

Now you say, how was I supposed to know that?

Well, let me say congratulations to you because you have taken the first step to knowing if your books are being kept the right way or not. If you are attending this course because you would like to be a bookkeeper, congratulations to you, too, for taking this step to earn the competency needed to become a competent bookkeeper.

All throughout the course, you may have a lot of aha moments and I would like you to take note of that. Keep that in your notes as you navigate through the modules so you can keep track on whether it is answered or not in the modules following your lesson.

If not, make sure to have your questions ready for the scheduled live sessions where you can ask our expert anything about bookkeeping. Enjoy learning bookkeeping through our self-paced bookkeeping course.

Definition of Bookkeeping

Bookkeeping is the day-to-day process of recording transactions, categorizing them, and reconciling bank statements. It forms the basis for the business’s accounting system. Bookkeepers are responsible for maintaining accurate ledgers, tracking debits and credits, managing invoices, and preparing financial statements. The accuracy of bookkeeping is crucial for the preparation of management accounting and financial accounting reports.

Bookkeeping is a critical and foundational aspect of the accounting process for businesses of all sizes. The role of a bookkeeper is essential to any business, ensuring that accurate and up-to-date financial information is available for decision-making, reporting, and compliance purposes.

The Importance of Bookkeeping

Bookkeeping is critical for several reasons:

• Accuracy: Ensures accurate tracking of financial transactions.
• Compliance: Helps in complying with legal obligations by maintaining accurate financial records.
• Decision Making: Provides the data necessary for making informed business decisions.
• Financial Management: Enables effective financial planning and management.
• Performance Evaluation: Assists in evaluating the financial performance of a business.

Why Bookkeeping is Relevant Today?

Financial Analysis and Decision Making: In today’s fast-paced business environment, having up-to-date financial information is crucial for making informed decisions. Bookkeeping provides the data necessary for financial analysis, helping businesses understand their financial health and guiding strategic planning.

Compliance and Reporting: Proper bookkeeping is essential for compliance with tax laws and regulations. It ensures that all financial transactions are accurately recorded and reported, reducing the risk of errors or fraud. This is especially relevant as tax authorities and regulatory bodies are increasingly focusing on transparency and accuracy in financial reporting.

Budgeting and Forecasting: Bookkeeping is the foundation for budgeting and forecasting activities. By maintaining detailed records of past transactions, businesses can better project future revenues and expenses, helping them plan for growth and manage cash flow more effectively.

Financial Accountability and Transparency: For stakeholders, including investors, creditors, and even employees, bookkeeping provides a clear picture of the company’s financial activities and stability. This transparency is crucial for building trust and securing investment.

Technology and Automation: The rise of technology and software solutions has transformed traditional bookkeeping, making it more efficient, accurate, and accessible. This evolution means bookkeepers must be adept not only in financial principles but also in using these technologies to deliver better insights and value to businesses.

Globalization: As businesses expand globally, the need for comprehensive bookkeeping practices that can accommodate different currencies, tax laws, and reporting standards becomes increasingly important. Bookkeepers play a key role in navigating these complexities.

Economic and Business Trends: Understanding economic and business trends is crucial for businesses to stay competitive. Bookkeeping data can help identify trends and shifts in the market, allowing businesses to adapt their strategies accordingly.

Skills and Qualities of Successful Bookkeepers

Attention to Detail: Precision is crucial in bookkeeping to ensure the accuracy of financial records.

Organizational Skills: Effective bookkeepers must manage numerous financial documents and records systematically.

Analytical Skills: The ability to analyze financial data and interpret what it means for the business is essential.

Technological Proficiency: Familiarity with bookkeeping software and tools is necessary to streamline the bookkeeping process.

Integrity and Confidentiality: Bookkeepers must handle sensitive financial information responsibly.

Bookkeeping is more than just a clerical job; it’s a vital function that supports the financial health and operational efficiency of a business. Its relevance in today’s business landscape cannot be overstated, with its role evolving alongside technological advancements and the global economy. For aspiring bookkeepers, the profession offers a dynamic and essential career path that demands a blend of traditional skills and adaptability to new technologies and practices.

Unit 2: Accounting and Bookkeeping: A Powerful Duo for Business Success

The Importance of Bookkeeping & Accounting in Tax Compliance

Introduction

In the dynamic world of business, the twin pillars of accounting and bookkeeping stand as the backbone of financial clarity and operational efficiency. Together, they form a powerful duo that underpins business success, providing the insights and structure necessary for informed decision-making and strategic planning. This module explores the symbiotic relationship between bookkeeping and accounting, two disciplines that, while distinct, work hand in hand to illuminate the financial health and trajectory of a business.

Bookkeeping, the meticulous recording of financial transactions, serves as the groundwork of business finance. It is through the careful logging, categorizing, and reconciling of every transaction that businesses can maintain accurate records, ensuring compliance and laying the foundation for robust financial analysis. Bookkeeping is the day-to-day heartbeat of a business’s financial operations, capturing the detail and nuance of financial activity that forms the bedrock of accounting.

Accounting, on the other hand, takes this foundational data and elevates it to a plane of strategic importance. It involves interpreting, classifying, analyzing, summarizing, and reporting financial data. Accounting translates the story told by bookkeeping data into actionable insights, financial statements, and future projections. It provides the lens through which stakeholders understand the economic entity’s performance, health, and prospects.

The relationship between bookkeeping and accounting is not just sequential but deeply integrated. Bookkeeping’s detailed records feed directly into the accounting process, where they are synthesized into a broader financial narrative. This narrative informs strategic business decisions, from operational adjustments to long-term investment strategies. Effective bookkeeping enhances the accounting process, ensuring that analyses, reports, and projections are based on reliable, up-to-date, and comprehensive data.

Understanding the nuances of this relationship is crucial for anyone involved in the financial management of a business. This module will delve into the roles and responsibilities of bookkeeping and accounting, demonstrating how they complement each other and how their integration is essential for a successful business strategy. By exploring the connection between these two functions, students will gain a holistic view of business finance, equipping them with the knowledge to harness the power of both for business success.

Definition

Bookkeeping and accounting are essential functions in the financial management of any business, but they serve different purposes and involve different processes. Here’s a detailed breakdown of the differences between the two.

• Bookkeeping is the process of systematically recording, classifying, and maintaining financial transactions on a daily basis. It’s the groundwork for the accounting process, ensuring that all financial data is accurately documented.
• Accounting is a broader field that involves interpreting, classifying, analyzing, summarizing, and reporting financial data. Accounting uses the information provided by bookkeeping to provide insights into the financial status of the business, helping stakeholders make informed decisions.

Purpose And Scope

• Bookkeeping primarily focuses on the accurate recording of financial transactions. This includes posting debits and credits, managing invoices, and maintaining and balancing ledgers, subsidiaries, and historical accounts.
• Accounting goes beyond recording to assess the financial situation of the business. It involves preparing financial statements, analyzing costs of operations, completing income tax returns, and helping the business understand the financial impact of its decisions.

Tasks Involved

Bookkeeping tasks include:

• Recording financial transactions
• Posting debits and credits
• Producing invoices
• Managing payroll
• Maintaining and balancing ledgers, daily journals, and subsidiaries

Accounting tasks include:

• Preparing adjusting entries (recording expenses that have occurred but aren’t yet recorded in the bookkeeping process)
• Preparing company financial statements
• Analyzing costs of operations
• Completing income tax returns
• Advising on financial decisions based on financial statements

Skills Required

• Bookkeeping requires attention to detail and a strong understanding of the basic accounting principles to accurately record financial transactions.
• Accounting requires a deeper understanding of financial concepts and principles, analytical skills to interpret financial data, and the ability to report and advise on financial matters. Accountants often hold professional certifications like CPA (Certified Public Accountant).

Tools and Technologies

• Bookkeeping can be accomplished with simple software tools designed for record-keeping and transaction tracking.
• Accounting often requires more sophisticated software that can handle complex analyses, financial statement preparation, and tax planning.

Professional Designation

• Bookkeepers may not necessarily hold a professional designation, though certifications like the TESDA NC 3 Certificate on Bookkeeping or the Certified Bookkeeper (CB) designation can demonstrate expertise.
• Accountants often hold professional designations, such as CPA, which require meeting education and experience requirements and passing an exam.

Decision Making

• Bookkeeping does not directly involve making financial decisions but supports decision-making by ensuring financial data is accurate and up-to-date.
• Accounting plays a direct role in financial decision-making by analyzing financial data, providing financial forecasts, and advising business owners and stakeholders on financial strategies.

The complexity of the bookkeeping process underscores the need for competent professionals and organizational support to ensure accuracy and compliance. Errors can arise from various sources, including non-compliance with policies by personnel or stakeholders seeking to bypass regulations for personal gain.

Samples would be a favored supplier who does not want any taxes to be withheld on the purchases from them;  a general manager who thinks he does not need to provide the receipts for his reimbursements; a business owner who thinks it is okay to get cash from the business for his personal needs. The list can go on and on. These are samples of the instances when the bookkeeper, no matter how competent, will not be able to support the books of the business in a BIR audit.

Is it impossible to surpass a BIR audit without penalties?

Of course not. All you need is an accounting manual that resonates with the current times, personnel that follows the business processes, competent accounting and bookkeeping professionals, and a documentation system that prevents any documents from being misplaced.

Sounds daunting? This is why we developed the self-paced bookkeeping course. We know that it is through education and training that stakeholders can better understand their roles and responsibilities, ultimately contributing to enhancing your financial processes and improving your compliance with tax laws.

In summary, bookkeeping is the foundation upon which accounting is built. While bookkeeping focuses on the recording and organizing of financial transactions, accounting takes this information to analyze, interpret, and make strategic financial decisions. Both functions are crucial for the successful financial management of a business, but they require different levels of expertise and serve different purposes.