Bookkeeping & Accounting All-in-One For Dummies, UK Edition

Jane Kelly, ACMA, CGMA, is a chartered management accountant who helps small business owners and employees with accounting, bookkeeping, and accounting software. She’s also the author of Sage 50 Accounts For Dummies, Bookkeeping For Dummies UK Edition, and Accounting Workbook For Dummies UK Edition.

• Introduction 1About This Book 1Foolish Assumptions 1Icons Used in This Book 2Beyond the Book 3Where to Go from Here 3BOOK 1: BASIC BOOKKEEPING 5Chapter 1: So You Want to Do the Books 7Delving into Bookkeeping Basics 8Defining and Maintaining a Ledger 12Using Bookkeeping Tools to Manage Daily Finances 13Running Tests for Accuracy 14Chapter 2: Getting Down to Bookkeeping Basics 19Bookkeeping: The Record-Keeping of the Business World 19Wading through Basic Bookkeeping Lingo 21Pedalling through the Accounting Cycle 24Understanding Accounting Methods 26Seeing Double with Double-Entry Bookkeeping 28Have a Go 32Answering the Have a Go Questions 34Chapter 3: Outlining Your Financial Roadmap with a Chart of Accounts 37Getting to Know the Chart of Accounts 38Starting with the Balance Sheet Accounts 39Keeping an Eye on the Profit and Loss Accounts 46Setting Up Your Chart of Accounts 50Have a Go 51Answering the Have a Go Questions 52Chapter 4: Looking at Ledgers 55Developing Entries for the Ledger 56Posting Sales Invoices 57Posting Purchase Invoices 59There’s an App for That! 61Entering Items into the Nominal Ledger 62Cashbook/Bank Transactions 63Introducing Control Accounts 68Understanding How the Ledgers Impact the Accounts 71Adjusting for Nominal Ledger Errors 73Have a Go 75Answering the Have a Go Questions 77Book 2: Bookkeeping Day to Day 81Chapter 1: Planning and Controlling Your Workload 83Introducing Checklists 84Sorting Out Your Sales Invoices 84Entering Your Purchases Invoices 86Checking Cash Payments and Receipts 88Using a Bank Feed to Reconcile Your Bank Account 90Entering Your Journals 91Controlling Your Books, Records, and Money 91Have a Go 94Answering the Have a Go Questions 95Chapter 2: Counting Your Sales 97Reviewing Your Sales 97Recording Your Sales in the Books 101Adjusting Your Sales 108Monitoring Trade Debtors 113Accepting Your Losses 114Have a Go 115Answering the Have a Go Questions 119Chapter 3: Buying and Tracking Your Purchases 121Identifying Different Types of Purchases 122Keeping Track of Stock 123Buying and Monitoring Supplies 132Staying on Top of Your Bills 132Have a Go 134Answering the Have a Go Questions 135Chapter 4: Doing Your Banking 137Making Sure that the Closing Cash Is Right 138Reconciling Bank Accounts 139Have a Go 146Answering the Have a Go Questions 147Book 3: Undertaking Monthly and Quarterly Tasks 151Chapter 1: Adding the Cost of Value-Added Tax (VAT) 153Looking into VAT 153Registering for VAT 158VAT Returns in the Digital Age 158Chapter 2: Employee Payroll and Benefits 167Staffing Your Business 168Running Your Payroll 169Taxing Benefits 181Posting Your Payroll Entries 182Settling Up with HM Revenue & Customs 183Handling Payroll Year-End 184Have a Go 185Answering the Have a Go Questions 186Chapter 3: Adjusting Your Books 189Adjusting All the Right Areas 190Checking Your Trial Balance 199Changing Your Chart of Accounts 200Have a Go 202Answering the Have a Go Questions 203Book 4: Working to Prepare Financial Statements 207Chapter 1: Producing a Profit and Loss Account 209Lining Up the Profit and Loss account 209Formatting the Profit and Loss Account 210Preparing the Profit and Loss Account 211Deciphering Gross Profit 214Monitoring Expenses 215Using the Profit and Loss Account to Make Business Decisions 216Testing Profits 218Branching Out with Profit and Loss Account Data 220Have a Go 222Answering the Have a Go Questions 223Chapter 2: Developing a Balance Sheet 227Breaking Down the Balance Sheet 227Gathering Balance Sheet Ingredients 229Presenting Your Balance Sheet 234Putting Your Balance Sheet to Work 237Have a Go 239Answering the Have a Go Questions 241Chapter 3: Cash Flows and the Cash Flow Statement 247The Three Types of Cash Flow 248Setting the Scene: Changes in Balance Sheet Accounts 250Using the Indirect or Direct Method? 251Looking at Cash Flow from Operating Activities 251Presenting the Cash Flow Statement 258Sailing through the Rest of the Cash Flow Statement 261Free Cash Flow: What on Earth Does That Mean? 265Scrutinising the Cash Flow Statement 265Book 5: Accountants: Managing the Business 267Chapter 1: Discovering Different Business Types 269Finding the Right Business Type 270Tax Reporting for Sole Traders 273Making Tax Digital — Income Tax Self-Assessment 274Filing Tax Forms for Partnerships 276Filing Returns for Limited Companies 277Introducing Software-Only Filing 278Have a Go 279Answering the Have a Go Questions 279Chapter 2: Choosing Accounting Methods 281Decision-Making behind the Scenes in Profit and Loss Accounts 282Calculating Cost of Goods Sold and Cost of Stock 286Identifying Stock Losses: Net Realisable Value (NRV) 290Managing Your Stock Position 291Appreciating Depreciation Methods 291Collecting or Writing Off Bad Debts 295Reconciling Corporation Tax 295Dealing with Foreign Exchange 296Two Final Issues to Consider 297Have a Go 298Answering the Have a Go Questions 299Chapter 3: Managing Profit Performance 303Redesigning the External Profit and Loss Account 304Basic Model for Management Profit and Loss Account 306Travelling Two Trails to Profit 310Have a Go 323Answering the Have a Go Questions 324Chapter 4: Cost Conundrums 327Previewing What’s Coming Down the Road 327What Makes Cost So Important? 328Sharpening Your Sensitivity to Costs 329Putting Together the Pieces of Product Cost for Manufacturers 334Allocating Indirect Costs Is as Simple as ABC — Not! 337Have a Go 344Answering the Have a Go Questions 346Chapter 5: Business Budgeting 351The Reasons for Budgeting 352Budgeting and Management Accounting 356Budgeting in Action 358Capital Budgeting 364Reporting on Variances 369Staying Flexible with Budgets 370Have a Go 371Answering the Have a Go Questions 372Book 6: Accountants: Working with The Outside World 375Chapter 1: Getting a Financial Report Ready for Prime Time 377Considering the Purpose of Annual Reporting 378Looking at the Contents of an Annual Report 380Making Sure that Disclosure Is Adequate 385Nudging the Numbers 390Sticking to the accountingBrowsing versus Reading Financial Reports 393Chapter 2: How Investors Read a Financial Report 395Financial Reporting by Private versus Public Businesses 396Analysing Financial Reports 400Navigating the Notes 415Checking for Warning Signs in the Audit Report 416Finding Financial Facts 417Have a Go 419Answering the Have a Go Questions 421Chapter 3: Professional Auditors and Advisers 425Why Audit? 426Who Can Audit Company Accounts? 428What Happens during an Audit? 430What’s in an Auditor’s Report 431Do Audits Always Catch Fraud? 436Auditors and the Rules 440From Audits to Advising 442Index 445