Chapter 3

Outlining Your Financial Roadmap with a Chart of Accounts

In This Chapter

arrow Introducing the Chart of Accounts

arrow Looking at Balance Sheet accounts

arrow Going over the Profit and Loss

arrow Creating your own Chart of Accounts

Can you imagine what a mess your cheque book would be if you didn’t record each cheque you write? Like us, you’ve probably forgotten to record a cheque or two on occasion, but you certainly found out quickly enough when an important payment bounced as a result. Yikes!

Keeping the books of a business can be a lot more difficult than maintaining a personal cheque book. Each business transaction must be carefully recorded to make sure that it goes into the right account. This careful bookkeeping gives you an effective tool for working out how well the business is doing financially.

As a bookkeeper, you need a roadmap to help you determine where to record all those transactions. This roadmap is called the Chart of Accounts. In this chapter, we tell you how to set up the Chart of Accounts, which includes many different accounts. We also review the types of transactions ...

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