• DETAILED RECORDING

  A bookkeeper would record in detail and up to date transactions that would not just help you in supervising your business accounts, but will also be of great assistance once you need your financial statements

• EASY PLANNING

  Once you have an overview of company accounts. It is much easier to plan and predict the future and face the difficulties with ease as you would be able to have a bird eye view of profit and loss evolutions in the balance sheet.

• COMPLIANCE OF LAW

  Bookkeeper will always comply with the latest legal regulations and will make sure all your accounts and books are up to date with any recent legal changes. Because the bookkeeper holds himself or herself accountable for any work that they do, you can rely on them to clear any mistakes. This saves time and effort for the bookkeeper, which in turn saves money for the company.

• REPORTING

  Even though you will need to wait for the accountant or the auditor to finish their reports to conclude official financial statements, you will always have an updated balance sheet to inquire about the current state of the accounts. You will be able to present these data to any interested party, providing additional confidence both in your work as a manager and in the company's health as a whole.

• TAXATION

  You would be better known about your taxability that is going to arise at the end of the fiscal year, you will be able to predict the outcome more accurately if you have access to detailed balance sheets over time. And accordingly you can manage your provisions for the year very well.

• RELATIONSHIP WITH OTHERS

  This all would be very helpful for a business to maintain its relations with banks as they would be more interested in giving loans and extra services.

• BUSINESS OWNERS BECOMES MORE RESPONSIVE

  Everyone who is maintaining its books of accounts on daily basis becomes more responsive as its business have all the records recorded in the books you will be able to react quickly to any changes that happen to the market or to your business. You will know the extent of your resources and current expenses, providing you with accurate insight.

Trial Balance

Trial Balance is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements. Ledger balances are segregated into debit balances and credit balances. Asset and expense accounts appear on the debit side of the trial balance whereas liabilities, capital and income accounts appear on the credit side. 
Now with the help of all these ledger balances we would be able to make our financial statements that comprises of three major reports that are:

• Trading A/c
• Income statement(Profit and loss A/c)
• Balance Sheet

Financial Statements

The financial statement tells if the business is profitable, if it will stay profitable or not and if there are any large problems looming, such as a continuous drop in sales over time. Reading the financial statement will give an overall view of the condition of the business and if there are any warnings signs of possible future problems. A bank or other such institution will look to the financial statement as the first indicator of how the business is performing and if there is a need for further investigation.

A financial statement is the combination of the three major reports on a business that are mentioned above and explained below:

• Trading A/c

It shows the gross profit of business activities during a specific period. It is a part of the final accounts of the entity. In other words, the trading account gives details of total sales, total purchases and direct expenses relating to purchase and sales.



In the above figure that shows Dr. Side in which there is:

• Opening stock- Stock at the Beginning of the year
• Purchase – Purchases made during the year net of the Purchase Return
• Direct expenses –Carriage Inward – Expense incurred towards bringing the goods to the location of the trader

And, whereas on Credit side depicts:

• Sales – Sales (net of Sale Return) made during the year
• Closing stock – Stock/Inventory at the end of the period,

• Income Statement (Profit and Loss A/c)

The Income Statement is one of a company’s core financial statements that show their profit and loss over a period of time.  The profit or loss is determined by taking all revenues and subtracting all expenses from both operating and non-operating activities. By doing, so we get our net profit of the business.



Here all expenses are shown on the Debit Side (Left hand side) and all the gain or profit are shown on the credit side (right hand side) of the profit and loss account. As shown in Figure 2, Let us understand each item separately:

Credit Side of Account

• Gross Profit: This Profit is being brought down to this ledger from the Trading Account as shown in Figure 2
• Discount Received: Discount Received from suppliers against early payment or bulk purchasing.
• Interest Received: Interest Received against the deposits made in a Bank or third party.

Debit Side of Account

• Rent: Expenses Incurred towards rent by the trader for the premises.
• Salaries: Payroll Expenses incurred towards the employee hired and working for the organization.
• Insurance Premium: The Stock insured or Insurance Expense incurred towards employees is shown on the debit side of the Account.
• Depreciation: The normal wear and tear of the asset used in the business is shown on the debit side of the Profit and Loss Account.
• Net Profit: The Net of Credits and Debits results in the profit or loss of the entity. This balancing figure is shown as the Net Profit in the Profit and Loss Account.

• Balance Sheet

  The balance sheet displays the company’s total assets, and how these assets are financed, through either debt or equity. It can also be referred to as a statement of net worth, or a statement of financial position. The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity.

  
  

  As such, the balance sheet is divided into two sides (or sections). The left side of the balance sheet outlines all of a company’s assets. On the right side, the balance sheet outlines the company’s liabilities and shareholders’ equity. The assets and liabilities are separated into two categories: Current Asset/Liabilities and Non-Current (Long-Term) Assets/Liabilities. More liquid accounts, such as Inventory, Cash, and Trades Payables, are placed in the current section before illiquid accounts (or non-current) such as Plant, Property, and Equipment (PP&E) and Long-Term Debt.

  Figure 3 depicts Balance Sheet of the entity representing financial position.

  Liabilities

  • Capital Account: This head represents the owner's equity for a sole proprietorship or shareholders' equity for a corporation
  • Loans (Liability): Liabilities are the money that a company owes to outside parties, from bills it has to pay to suppliers to interest on bonds it has issued to creditors to rent, utilities and salaries.
  • Current Liability: Current liabilities are a company's short-term financial obligations that are due within one year or within a normal operating cycle. 
  • Accounts Payable: Accounts payable is the amount of short-term debt or money owed to suppliers and creditors by a company and helps in management of finances. 
  • Profit and Loss A/c: This amount shows the profit earned during the year by the individual 

  Assets

  • Fixed Assets: A fixed asset is a long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income. Fixed assets are not expected to be consumed or converted into cash within a year. As there is a fixed asset named computers in the above Balance sheet.
  • Current Assets: Current assets are all the assets of a company that are expected to be sold or used as a result of standard business operations over the next year.
  • Closing Stock Goods that remain unsold at the end of an accounting period are known as closing stock.
  • Sundry Debtors (Account Receivables) is the money due to a company for goods or services delivered or used but not yet paid for by customers—are considered current assets as long as they can be expected to be paid within a year.
  • Cash and Cash Equivalents Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately.