BELOW IS A LIST OF TERMS AND PRACTICES THAT YOU SHOULD KNOW AND MUST BE DONE WHEN OPERATING YOUR BUSINESS
It is very imperative to know what you earn, spent, who your debtors and creditors are. It is also recommended to organise receipts in file folders as a backup storage to your computerised version.
SALES/INCOME/REVENUE: – This refers to funds received from customers for sales and services provided which must be recorded daily or as often as possible not surpassing a month.
PURCHASES: – This refers to items bought only relating to the business, for example, stock, inventory, fixed assets, goods/items for resale.
EXPENSES: – This refers to all money spent for goods and services incurred in your daily business operations.
RECEIVABLES: – This refers to debtors who owe your business such as your customers/clients who take goods or services from your business on credit. Invoicing all clients will aid in keeping track of this.
PAYABLES: – This refers to all outstanding amounts owed to your creditors/suppliers, this includes your utilities, rent, statutory, GCT, telephone and all your recurring monthly costs.
ASSETS: – This refers to ALL furniture, computer equipment, motor vehicle purchased for your business, leasehold improvements which is refurbishing upgrade and repairs. This is usually recorded on a fixed asset schedule (F1) and your capital allowance (CA) to ascertain your net book value (NBV). This can be used to offset your annual tax returns.
LOAN SCHEDULE: – This is a schedule received from your financial institution which bares your principal, interests, repayment tenure and monthly payable amounts. This must be booked as a journal entry in your accounts. Monthly payments must be recorded so that balance can be close to accurate to the bank records
INVENTORY/STOCK: – This refers to goods purchased for resale. It is important to record the opening and closing balance at the beginning and the end of your financial period respectively.
CAPITAL: – This refers to money and assets invested in your business at start-up. All start-up costs must be recorded to easily identify the moment your business begins to make a profit after all you have spent is recovered.
