Objectives of a Basic Accounting System
Keeping track of how your business is going is not difficult if you have in place a basic system.
Your accounting (or bookkeeping) system share the same 2 basic objectives.
These are:
- To keep track of all income and expenses and increase the chances of your business making a profit
- To collect all the necessary financial data from your accounts so that financial statements can be drawn up and a profit arrived at for taxation purposes.
The actual process of keeping your books involves 3 steps:
- Keep receipts or other acceptable documentation which confirms the receipts and payments of your business
- Make sure you summarise your income and expenditure for each period
- Complete summaries for your accountant or financial adviser so that financial statements and annual reports can be completed
Overview - Basic Accounting System
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