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Frequently Asked Questions

This FAQ section provides answers to some of the most frequently answered questions people have about bookkeeping. If you have any general questions about bookkeeping or bookkeepers and the work they do, feel free to refer to our guide find the answer. This section covers some of the questions most commonly fielded by bookkeepers. If you have a question that is not covered by our FAQ section, feel free to contact us and drop us a line.

Understanding Basic Bookkeeping

Some businesses hire full time bookkeepers and accountants and thus the managers of these companies might not know all that much about the technical aspects of the trade or the kinds of work these professionals do. But it is important to understand some of the basics of the trade, including the work these people produce and the ways a business can use the data they generate to run more efficiently. Since these financial figures represent the essential nature of business, owners and managers need to be aware of them and be able to digest information produced by bookkeepers. Our FAQ section includes questions and answers on these figures.

The more managers and owners know about a company's financials, the better they will be able to manage its finances. Many business people know and understand this and thus have many different questions about financials. Our FAQs spend some time dealing with these financials. Owners should understand how their money is spent and where it all goes. And they should be able to trace the money they have coming back in as well. For this reason, the two basic financial summary statements are included in our frequently asked questions. Business owners should know how to read a balance sheet and an income statement, and they should be able to differentiate between the two and know the purpose for and the significance of each one.

The Purpose of Financial Projections

Part of the reason why bookkeeping is so important is that it allows for incisive financial projections to be made. Some business leaders and especially self employed sole proprietors wonder why these projections are really necessary. Our FAQ section delves into the area of projections and provides reasons for these projections and the ways they are used. The ways financial projections are used for the planning of future business activities are involved. Our FAQ section explains how precise accuracy is not the goal of these projections so much as is a credible and ambitious goal to reach for.

The Need for Financial Statements

Often business people wonder what kinds of financial statements they really need for the daily operations of their companies. Our FAQ deals with this question and presents the two types of statements every business owner should know and understand. The balance sheet is a record of assets, liabilities, and capital on a given day. The income or profit and loss statement is a summary of earnings or losses over a certain period of time.

There are other important financial terms to master as well, aside from the balance sheet and income statement. Many financial professionals recommend that business people become familiar with these terms in addition to the two others. Our FAQ section addresses these statements and provides a definition for them: cash flow statement, equity, capital, and other related terms are listed and defined.

Each company is different and every business is structured differently in terms of its finances. Some might be very simple operations that do not require much more than a checkbook and a credit card. But more complex operations can benefit from expert bookkeeping.