Appendix B. If Numbers Are Your Friends
You don't need to know much about accounting or about double-entry bookkeeping to use QuickBooks, which, as you know, is most of its appeal. If you're serious about this accounting business or serious about your business, consider finding out a bit more; setting up QuickBooks and understanding all the QuickBooks reports will be easier, and you'll be more sophisticated in your accounting, too.
Just because the accounting in this appendix is a little more complicated doesn't mean that you can't understand it. To make this whole discussion more concrete, I use one running example. I hope it helps you out! If nothing else, it'll inspire you to get into the rowboat rental business.
Keying In on Profit
Start with the big picture. The key purpose of an accounting system is to enable you to answer the burning question "Am I making any money?"
Accounting is that simple. Really. At least conceptually. So, throughout the rest of this appendix, I just talk about how to calculate a business's profits in a reasonably accurate but still practical manner.
Let me introduce you to the new you
You just moved to Montana for the laid-back living and fresh air. You live in a cute log cabin on Flathead Lake. To support yourself, you plan to purchase several rowboats and rent them to visiting fly fishermen. Of course, you'll probably need to do quite a bit of fly fishing, too, but just consider it the price you pay for being your own boss.