Bookkeeping Courses

Bookkeeping courses vary between different providers but there are some basics that the course should teach you.

For starters, if you are new to bookkeeping, make sure that your course includes tutor support. Some of the concepts you will be learning can be a little confusing the first time you read it and you may just need a little further clarification. Having access to a tutor by phone and email can mean the difference between completing the course or not. If you don't have tutor support it's all too easy to throw the course materials into the back of the wardrobe never to be seen again, just because you didn't understand one small part of it.

So what should the contents of the course be?

Firstly, the course will cover double-entry bookkeeping. Double-entry bookkeeping can send chills down the spine but this needn't be the case. This is the bedrock of bookkeeping. Without learning this method of recording transactions you will find it very hard to produce accounts for a reasonable sized business.

Secondly, it will cover the basics of debits and credits and what these are. Our own day-to-day use of the word ‘credit' in relation to putting money into our bank account does not have the same meaning in bookkeeping. In bookkeeping it means money that is owed to someone. In the above example, the transaction is seen from the bank's point of view. Although we put money into our account (credit the bank account) in actual fact, the bank owes us this money which is why it is called a ‘credit' transaction.

Thirdly, the course will cover what an ‘account' is and how we record transactions in the account. An account is a list of transactions that occur between our business and one other. For example, if we were running a shop selling baby items, we might have a trade account with Tomy. To keep things simple in our bookkeeping, we would have one page that dealt only with the transactions we had with Tomy. This would be the ‘Tomy Account' within our bookkeeping. Don't get ‘account' (singular) confused with ‘accounts' (plural). When we talk about ‘accounts' in the plural sense, we are talking about the account with Tomy, the account with Avent, and the account with Fisher-Price all put together to form one ‘set' of accounts.

Fourthly, the course should cover what to do if you've only got a small business that deals in cash or cheque transactions only. For example if you are a window cleaner. You will more than likely receive cash from your customers and pay cash for your supplies. You may not have a trade account anywhere, buying your window cleaning items from the local supermarket. This kind of business is called a cash business and as such will normally only have a cash book accounting system. This is the simplest of all accounting systems and suits this kind of business better that the double-entry system.

Bank and cash records will make up another section you must know. This includes the petty cash system and bank reconciliations. Petty cash is for keeping track of small transactions. A small amount of cash is kept in a cash box and when someone purchases some small value items for the business, the money can be reimbursed straightaway from the cash. Records are kept of each transaction and the overall balance is transferred to the appropriate (in this case, stationery) account at the end of the month. This means that large amounts of small transactions are not written into the main ledger.

There are various books that transactions can be recorded into. The ledger is where the accounts are kept. The ledger is usually split into different sections. There is usually a sales ledger where our sales on account are recorded, a purchases ledger where details of our purchases on account are recorded and a general ledger where all other transactions are recorded. There are others, however, called the books of prime entry. These are used to record the transactions on a daily basis. The balance of these can then be transferred to the ledger at the end of the week, month or year, again to avoid large numbers of transactions filling the ledgers.

VAT is another major point that should be covered in any bookkeeping courses. VAT is a tax added when a business's turnover reaches a certain level. There are some exemptions to the rule which includes books, some food and children's clothing amongst others. There are also specific rules on how to calculate VAT when you offer a discount to your trade customers who pay in full early.

Payroll is a point that may or may not be covered in bookkeeping courses. Payroll is a whole different ball game which is useful to know and there are courses out there which concentrate on this. However, make sure your bookkeeping course covers this area in some detail, no matter how small, so you get an idea of what needs to be recorded in the accounts.

Once you have learned all this information you will need to be able to prepare the end of year accounts for your business. Make sure your course covers the following in detail.

A profit and loss statement can also be referred to as an income statement. The information in this report will tell you whether or not your business is making a profit or a loss. The first half gives details of your gross profit. For example, if you sell a jumper at £10 but you bought it from your supplier at a cost of £5, you've made a gross profit of £5. The second half of the income statement tells you what your net profit is. Net profit is what you've earned after all other expenses have been taken away. For example, if the overheads per jumper were £2 then your net profit would be £3; that is, your gross profit of £5 minus the £2 overheads.

Another report which you will learn about is the balance sheet. This report gives you information about the value of assets you own, what you are owed (current assets) and what you owe (liabilities) at a specific point in time. For example, on the 31st December you may have an asset of a computer worth £300. You may have people who owe you £400 but you may also owe your suppliers an amount of £200. In effect your business has assets (including current assets) of £700 and liabilities of £200. In effect, your business has a balance of £500. There is more to it, but it is very useful information.

There are other things that are taught on the courses that haven't been covered here, for example your course may go into details of accounts for non-profit organizations, partnerships and possibly credit control. As stated at the beginning of this article, different bookkeeping courses cover different aspects of the subject. When signing up for your course make sure it covers what you want it to. If you're not sure, call the provider and tell them why you want to take a course. They will tell you which will be most suited to your needs.

If you are looking to change your career, you would be wise to take a course that will lead to a qualification. There are three main qualifications in the UK. These are from the two main bookkeeping associations (the Institute of Certified Bookkeepers (ICB) and International Association of Bookkeepers) and the Association of Accounting Technicians (AAT). Each has details of their curriculum on their websites so make sure the course you take covers all the requirements.

The above may sound overwhelming if you're currently a small business with a few transactions a month, but the information that can be gained from bookkeeping courses will stand you in good stead for when you've got a few hundred transactions per month.