Bookkeeping and accounting

Introduction

A topic that has me interested for a way has been accounting so I thought that this essay was a good opportunity to learn more about it. I needed a book in English about accounting, so I went to the library and the only one they had was Bookkeeping and Accounting by Roger Mason.

The concept of the book is to learn bookkeeping and accounting in a week “Learn in a week, what the experts learn in a lifetime”. Starting to read the book I still wasn’t so sure if I know what an accountant exactly does and how he does it, even if we talked about it in class. Another good thing about this book is that it has practical examples and exercises and multiple-choice questions to do, to verify if we have understood what the book teaches after each chapter.

The book instructs us to start reading it on a Sunday and read a chapter by day. The first chapter after the introduction is “The basic principles of bookkeeping”, where is explained single-entry bookkeeping, double-entry bookkeeping, and the basic rules and disciplines of double-entry bookkeeping. We had already spoken about single-entry bookkeeping and double-entry bookkeeping, so I already knew the concept, but I didn’t know a lot about them. So, in this chapter, I learned well what is single and double-entry bookkeeping but the most important learning for me in this chapter was the basic rules and discipline of double-entry bookkeeping because they will be needed in the rest of the book.

Monday

Monday it got a more challenging because the chapter was about different types of account and ledger. The different accounts I understood well (income accounts, expenditure account, asset accounts, liability accounts and capital accounts), but the ledgers where more challenging to understand at first because I had never heard about terms as: nominal ledger, sales ledger, sales day book, purchase ledger, purchase day book. After reading this chapter I still had some doubts about my understanding of the topic so I went to the internet to clarify my doubts. And now I feel that I have understood the different types of accounts and ledges and for what each one serves.

Tuesday

Tuesday the chapter was more aspects of bookkeeping, to build on the chapter of Monday, because before you only can move to the preparatory work for the accounts if the underlying bookkeeping records are complete, accurate and up to date. In this chapter I learned about the cash book, the bank reconciliation, other reconciliations and checks, the journal, petty cash, the trial balance. This chapter was also challenging because I had never heard these terms before in my life, but the book made I pretty good job explaining it to me.

Wednesday

Wednesday´s chapter was preparation for the accounts, were we look at entries that are not yet recorded in the trial balance and how to adjust it to reflect those entries. I thought that this was a important chapter and it wasn’t very hard to understand. I thought that learn how to enter accruals, prepayments, reserves and provision and depreciation that we had already talked a little bit in class is very important because these are things that are going to happened to us, per example if we have to deliver our expenses in 15 of march and the electricity bill comes 31 of march we can calculate in average how much it costs half of a month of electricity, then debiting the account of the expenses and credit the accrual account. And then I still learned how to post final adjustments and extend trial balance, but I don’t think that I am going to use that a lot in my life unless I become an accountant.

Thursday

Thursday the chapter was “The profit and loss account” and even if we talked about it in class I still wasn’t sure if I know well what is it. But after reading this chapter I feel that I know what it is and I am happy about it because it benefits managers to understand what is written in it when the accountant send it. Learned also some more practical things about how to finish the profit and loss account. Also learned how to adapt the profit and loss account to a trading business and a manufacturing business and I think that was important to realize that the oscillations in the prices of stock owned by your company, even if you don’t sell it, it affects your net profit and how in a manufacturing business the quantity of stock that the company has also affects the net profit.

Friday

Friday the chapter was “The balance sheet”, also think is important to understand it well because is what the accountant gives back to you (also the profit and loss account). After reading this chapter I feel that I have a better understanding what is the balance sheet, also learned from this chapter wat are fixed assets, current assets, current liabilities, net current assets(=working capital) and long term liabilities and I think that its important to know the differences between them even if I don’t need to create a balance sheet in my future, because when I read one I will be comfortable with the vocabulary used in it, also learned what is an asset stripper and thought that was useful information.

Saturday

Saturday´s chapter was “Understanding published accounts”. That was a chapter I was looking forward to, because if you can read the published accounts you can understand how much money a company is making, what kind of assets they have, the turnover, the net worth of the company, the directors report, cash flow statement, etc.

Additional chapter

The book also had an additional chapter besides the 7, of tips on how to survive in tough times. For example “use the figures to get customers to pay promptly” because in tuff times you rather have money in your account that in your customers’ account. Or “Be realistic about bad debt reserve” because when times are tough customers are likely to try to delay payments, but maybe the customer isn’t able to pay, and maybe it will never be able to pay so you shouldn’t fool yourself.

Conclusion

In conclusion, I liked the book, it had a lot of practical explaining and exercises for me to do. I feel that I understand better what an accountant does and the result of it. I don’t know if it was the best book to write an essay about because I don’t know if I will give a lot of practical use to what I have learned unless I become an accountant and even if I do the book said that there is the possibility to use computers to make it a little bit simpler. But even if I don’t become an accountant, I am glad that I made this essay about it because it was a great opportunity to learn more about it.

References

(Manson, 2012, Bookkeeping and accounting, Teaching yourself) Read November 2021