Course 4 - Bookkeeping

A successful business must keep records of all of its financial transactions. A business' books should have entries for all income received and outgoing expenses.

A business' financial records are a way to:

• Maintain control of the money.
• Monitor the health and success of the business.
• Demonstrate the health of the business to other institutions or individuals.
• Help in planning for the future.

A business can use its record books to:

• Analyze their sales.
• Analyze their expenses.
• Analyze their profits.

Income, Expenses and Profits

The following is an example of a simple bookkeeping method presented in Course 4:

Womens Weavers Accounting Records - October

Date	Description	Income	Expenses
10/01/03	Thread		$30.00
10/04/03	Monthly Rent		$20.00
10/05/03	3 Handbags	$15.00
10/06/03	1 Handbag, 1 Pillowcase	$37.00
10/07/03	1000 Plastic Bags		$10.00
10/12/03	1 Table Cloth	$35.00
10/13/03	5 Handbags	$25.00
10/15/03	Labor		$30.00
Totals		$112.00	$90.00

Total Income ($112.00) - Total Expenses ($90.00) = Profits ($22.00)

Simple Interest

Also discussed in this course is the concept of interest and the use of easy to understand formulas used to calculate simple interest. Below is an example:

Simple Interest Formula     I = C x R x T

I = Interest, C = Capital, R = Rate, T = Time

Problem:

What is the simple interest paid on a loan for $100.00, for 2 years, at 12%?

Answer:

$24.00 ( Interest ) = $100.00 ( Capital ) x 12% ( Rate ) x 2 years ( Time )