Tracking Financial Performance

Bookkeepers are crucial to the accounting cycle.

Bookkeepers are responsible for:

1. Identifying and/or listing assets in the company's records

2. Precisely documenting any transaction affecting the company's assets

3. Locating assets on financial statements.

4. Verifying the accuracy of all financial records.

ASSETS - Everything and Anything the Business Owns

Debits and Credits

Assets are adjusted by using debits or credits. Typically, assets have a normal debit balance, which means we anticipate the account balance to appear on the debit side of the t-account. 

To increase an asset, you would debit it.

To decrease an asset, you would credit it. 

Sales transactions

Sales transactions generate revenue for a business by selling goods and services. Sales generate the primary operating revenue for a business, coming from its main business activities that contribute the majority of its income. This revenue can come from selling goods for cash or cash equivalents, rent received from tenants, and income earned by providing professional services to customers.

Inventory

Inventory, or stock, is the raw material a business uses in production or finished goods ready to sell. Inventory is a key part of a business's operations, particularly for manufacturing, retail, or distribution. It refers to the goods a business holds in stock for sale to customers. Proper inventory management is critical for smooth operations. Having the right amount of inventory is challenging to manage—too much can tie up resources and increase costs, while too little can lead to stockouts and lost sales. Inventory is a principal source of revenue generation and, consequently, a vital factor in achieving profitability for shareholders. Finding the right balance is necessary to boost sales and revenue, and contribute to overall profitability for the business. 

Property, Plant, and Equipment (PP&E)

A business’s long-term assets that are expected to generate economic benefits and contribute to revenue for many years. Investment in PP&E is also called a capital investment.

Depreciation

Spreading out the cost of an item over the expected life of the item. Depreciation helps businesses spread out the expense of an asset over its lifetime instead of deducting the full cost upfront, which affects the business's profit. It enables the business to continue generating revenue from the asset. Depreciation is calculated based on the asset's expected lifespan. 

Example of Depreciation:

When you own a costly item like a vehicle, you spread the cost over its expected lifespan. Instead of recording a $50,000 expense all at once, you divide it into $10,000 per year for 5 years. 

WHY TRACK ASSETS? Bookkeepers record sales, assets, inventory, and depreciation to provide accurate and timely information about a business's financial performance, resources and obligations. This information is critical for making informed pricing, marketing, operations, and financial management decisions.  Why do you need a bookkeeper? How can they help you? Bookkeepers help by recording sales, assets, inventory, and depreciation which provides timely and accurate information about your business's financial performance, resources and obligations.

Why do you need that information?

This information is helps you make informed pricing, marketing, operations, and financial management decisions.

How does that happen? What do they do? and What do I do?

Bookkeepers work with you to ensure that there are accurate records of the business assets. And they also track financial transactions that affect your assets. They will send you messages requests or to do's to have you follow up with them. They may meet with you to ask questions. You must be willing to reply with answers and at time documents that show proof of the assets you are referring to. They also help ensure that the balance of each asset account is up-to-date. This helps you know how the business is doing financially, so that you can focus on providing excellent service and products to your customers.

As bookkeepers, we are passionate about helping small businesses succeed. One of the key ways we do this is by making sure our clients assets are accurately recorded and tracked.

When it comes to tracking assets, establish a clear and organized system for recording and monitoring all assets.

Financial statements

There are a number of different financial statements bookkeepers will use, but for assets, the balance sheet is the key financial statement.