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

Your Accounting System Monitors Periodically these areas:
A good accounting system allows you to extract correct information to help you monitor on a daily, weekly or monthly basis various areas of your business.
Each Day
- Balance of the cash you have in your bank account.
- Balance of cash that you have on hand.
- A daily summary of all your sales and income received.
- A daily summary of all your expenses and monies paid out.
- Other daily matters that require attention.
Each Week
- Details of people that owe you money for sales you have made to them on credit (accounts receivable).
- Details of people that you owe money to for purchases you have made on credit (accounts payable).
- Details of your staff and payroll.
- Details of the taxes due by your business and the Fed Income Tax and Sales Tax due to the IRS.
Each Month
- Details information extracted from your accounting system so that monthly financial reports and accounts can be prepared by your accountant.
- Receive copies of your profit and loss accounts and balance sheets for the month.
- Review your balance sheet for the month so that you can see what the assets and liabilities are.
- Reconcile your bank account by doing a full Bank Reconciliation.
- Balance your petty cash.
- Review various positions of the business especially as regards its accounts receivable to ensure that debt collection is not slow and that bad debts do not arise.