Chapter 2: Double-Entry Bookkeeping
In This Chapter
Checking out the fiddle-faddle method of accounting
Grasping how double-entry bookkeeping works
Looking at an (almost) real-life example
Figuring out how QuickBooks helps
The preceding chapter describes why businesses create financial statements and how these financial statements can be used. If you’ve read Book I, Chapter 1, or if you’ve spent much time managing a business, you probably know what you need to know about financial statements. In truth, financial statements are pretty straightforward. An income statement, for example, shows a firm’s revenues, expenses, and profits. A balance sheet itemizes a firm’s assets, liabilities, and owner’s equity. So far, so good.
Unfortunately, preparing traditional financial statements is more complicated and tedious. The work of preparing financial statements — called accounting or bookkeeping — requires either a whole bunch of fiddle-faddling with numbers or learning how to use double-entry bookkeeping.
In this chapter, I start by describing the fiddle-faddle method. This isn’t because ...