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by Robin Sharma
Bookkeeping Made Simple summary
Brief summary
Bookkeeping Made Simple by David A. Flannery offers a practical guide to understanding and implementing bookkeeping principles. It covers topics such as financial statements, budgeting, and tax preparation, making it an invaluable resource for small business owners and entrepreneurs.
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Table of Contents
Bookkeeping Made Simple
Summary of key ideas
Understanding the Basics of Bookkeeping
In Bookkeeping Made Simple, David A. Flannery starts by introducing readers to the fundamental concepts of bookkeeping. He explains the importance of keeping accurate financial records and outlines the different types of accounts, such as assets, liabilities, and equity. Flannery also delves into the double-entry system, the foundation of modern accounting, which ensures that every financial transaction has equal and opposite effects on the company's balance sheet and income statement.
Flannery goes on to discuss the process of journalizing and posting transactions, emphasizing the significance of maintaining a general ledger to record all financial activities. He also introduces the trial balance, which is used to ensure that debits and credits are equal, marking the end of the accounting cycle's first step.
Adjusting Entries and Financial Statements
The book progresses to the next phase of the accounting cycle, focusing on adjusting entries and the preparation of financial statements. Flannery explains the need for these adjustments, which are necessary to accurately reflect a company's financial position and performance. He walks readers through the process of adjusting accounts for accrued revenues and expenses, prepaid expenses, and unearned revenues.
Following the adjustment process, Flannery illustrates how to prepare the four primary financial statements: the income statement, statement of retained earnings, balance sheet, and statement of cash flows. He emphasizes the importance of these reports in providing a comprehensive view of a company's financial health and performance.
Special Journals, Control Accounts, and Petty Cash
Flannery then introduces the concept of special journals, which are used to record specific types of transactions, such as sales, purchases, and cash disbursements. He explains how these journals streamline the recording process and improve efficiency in a company's accounting system.
In addition to special journals, Flannery discusses the use of control accounts, which summarize the balances of related subsidiary accounts in the general ledger. He also covers the management of petty cash, a small amount of discretionary funds kept on hand to cover minor expenses.
Payroll, Partnerships, and Closing the Books
Next, Bookkeeping Made Simple explores the complexities of payroll accounting, including the calculation of gross pay, deductions, and net pay. Flannery details the various payroll taxes employers must withhold and pay on behalf of their employees, as well as the necessary journal entries to record payroll transactions.
Flannery also provides an overview of partnership accounting, explaining the unique aspects of financial reporting for businesses with multiple owners. He covers the allocation of profits and losses, partner's equity accounts, and the preparation of a statement of partners' equity.
Finally, the book concludes with a discussion on the process of closing the books at the end of an accounting period. Flannery outlines the necessary steps to prepare the accounts for the new period, including the closing entries, post-closing trial balance, and the reversal of adjusting entries.
Conclusion
In summary, Bookkeeping Made Simple provides a comprehensive overview of bookkeeping and accounting processes, making it an invaluable resource for small business owners, accounting students, and anyone seeking to understand the financial operations of a company. With its clear explanations and practical examples, the book equips readers with the knowledge and skills necessary to establish and maintain accurate financial records.
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What is Bookkeeping Made Simple about?
Bookkeeping Made Simple by David A. Flannery provides a clear and practical guide to understanding the basics of bookkeeping. Whether you're a small business owner or just want to improve your financial literacy, this book breaks down complex concepts and offers step-by-step instructions to help you keep accurate and organized financial records.
Bookkeeping Made Simple Review
Bookkeeping Made Simple (2020) simplifies the complex world of financial record-keeping for businesses and individuals. Here's why this book is a valuable read:
- Explains fundamental accounting principles in a clear and accessible manner, making it easy for readers to grasp key concepts.
- Offers practical tips and examples on organizing financial data effectively, helping readers apply the knowledge to real-life situations.
- Keeps the subject engaging and relevant by providing insights into how proper bookkeeping can lead to financial success, ensuring readers stay interested and motivated.
Who should read Bookkeeping Made Simple?
Small business owners who want to understand and manage their finances
Entrepreneurs looking to improve their bookkeeping skills
Students studying accounting or finance
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Bookkeeping Made Simple FAQs
What is the main message of Bookkeeping Made Simple?
The main message of Bookkeeping Made Simple is to simplify financial tracking and reporting for individuals and businesses.
How long does it take to read Bookkeeping Made Simple?
Reading Bookkeeping Made Simple takes a few hours. The Blinkist summary can be read in less than 15 minutes.
Is Bookkeeping Made Simple a good book? Is it worth reading?
Bookkeeping Made Simple is a practical guide that simplifies complex financial concepts, making it a valuable read for anyone.
Who is the author of Bookkeeping Made Simple?
David A. Flannery is the author of Bookkeeping Made Simple.
What to read after Bookkeeping Made Simple?
If you're wondering what to read next after Bookkeeping Made Simple, here are some recommendations we suggest:
- Basic Economics by Thomas Sowell
- The Ascent of Money by Niall Ferguson
- Think and Grow Rich by Napoleon Hill
- The 4-Hour Workweek by Tim Ferriss
- Rich Dad, Poor Dad by Robert T. Kiyosaki
- Secrets of the Millionaire Mind by T. Harv Eker
- The Richest Man in Babylon by George S. Clason
- Business Adventures by John Brooks
- The Most Important Thing by Howard Marks
- More Money Than God by Sebastian Mallaby
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