What is a Good Pattern for Entering Items?

Most people will develop a pattern to enter items into their bookkeeping systems. Developing a pattern and having a checklist helps to ensure you did not forget something on your books. The pattern that I generally use is in this order.

1. Record Deposits
2. Record Bank Transfers between accounts
3. Record recurring debits on the bank account for the month
4. Record purchases of inventory
5. Record credit card purchases
6. Record checks
7. Record debits per bank statement
8. Record Cash purchases

I will discuss some of the nuances on some of these items further.

Next, what should I know before recording bank deposits?

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What is a Journal?

A Journal in bookkeeping terms, is simply a listing of transactions you have entered in the order you put them in. Most of the time the order is by date, because most bookkeeping is done chronologically. This report will basically list the date of the transaction (that you put on it), the accounts that were hit as a debit and a credit, and the amount. A journal is good to look at more in terms of looking at it comparatively to see if you missed any items. Most of the time when you do bookkeeping you are going to develop a pattern for posting items. Just make sure that each month has this same pattern going.

Next, what is a good pattern to use for entering items?

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What is an Income Statement?

The most important report that needs to be run, the Income Statement, basically tells you and anyone else who looks at it how much money you brought in and how much you spent on your business. The difference is either a profit or a loss. Hopefully you will have more months when you have a profit than the other way around. Banks will look at this document to try to determine whether or not you are a business that will stay in business for the long haul. Anytime you need to prove income for your business you may be asked to present this statement.

Next, what is a journal?


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What kind of bookkeeping reports do I need to run?

As far as accounting or bookkeeping software is concerned, the two reports that are vital for financial purposes are the Balance Sheet and the Income Statement. I will explain what each one is and what purpose they serve. The Balance Sheet is simply a listing of balances of your assets and liabilities. Assets are anything major you purchase of value such as furniture, equipment, autos, computers, software etc. Assets are also any money you have in banks or other investments you such as CD’s. Liabilities are basically any debt obligations that you owe such as loans on the equipment or car you purchased for the business. It could also include things such as a line of credit at your bank or if you took out a home equity loan to use for business. The purpose of a balance sheet is to show what you are worth in terms of your business. Banks use this information to determine how you have been handling your business and may use this information to decide whether or not you are a good credit risk. Sometimes companies that you want to do business with will ask for the balance sheet.
Next, What is an Income Statement?

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Entering Each Item

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