In order to help an entrepreneur ensure the accuracy of their balance sheets, Edmonton bookkeeping recommends business owners learned early on in their entrepreneurship what accounts payable are, and how they affect the balance sheets of the business. Into it, who is the company that makes accounting software QuickBooks surveyed several small business owners in order to quiz them on their understanding of business finances? They ask questions such as how they can improve their cash flow, what are accruals and what is the role of a balance sheet. An alarming majority, 82% of the respondents scored less than 70% on this quiz. Helping entrepreneurs understand their finances right away in their business, can help ensure they are making the best financial decisions possible, which can positively impact the success of their business.

The accounts payable of a business refers to the purchase that an entrepreneur has made and does not pay immediately. They receive an invoice and are expected to pay their vendors within a previously agreed time period. This amount that they owe becomes and accounts payable in their financial statements. Because it is essentially a liability, entrepreneurs need to understand that it is going to show up on the balance sheets of their business under the liability section.

Entrepreneurs should be using this balance sheet on a regular basis in order to gauge the overall financial health of their business. It will include a list of the assets, liabilities, and equity in the business. When it is up-to-date, entrepreneurs can subtract the liabilities in their business from the assets, and use that information to gauge approximately how much money they have in their business to use. Business owners again the habit of doing this often, any time they are going to make a financial decision in their business, they should consult their balance sheet first. When they ensure that they are entering their invoices from their vendors into their accounting software regularly, they ensure the accuracy of the balance sheet. This can go a long way in helping entrepreneurs make very informed financial decisions in their business.

A business owner should understand how it affects their balance sheet when they enter the invoices that they receive into their accounting software. They should verify that all of the invoices amounts that they enter, increase the liability on their balance sheet by the same amount. Also, Edmonton bookkeeping says that when entrepreneurs make payments to those invoices, what should be happening is that the liabilities of the business on the balance sheet decreases as well. Business owners should also be aware that since any time they make payments in their business, it comes out of their cash listed in their assets, so payments should also decrease the amount they have available on the cash section of their balance sheet.

By understanding what Accounts Payable is, and how that is listed in their balance sheets, entrepreneurs can understand that they should be not only keeping their invoices entered into their accounting software on a regular basis but how they can use that balance sheet in order to make informed financial decisions in their business.

Edmonton Bookkeeping | Ensuring The Accuracy Of The Balance Sheets

When the way that business owners can ensure the accuracy of the balance sheets in their business says Edmonton bookkeeping, is by ensuring the accuracy of their invoices, and entering the invoices into their accounting software so that the amount outstanding for their accounts payable is always accurate. When entrepreneurs can ensure they have an accurate account payable in their accounting software, entrepreneurs can appropriately subtract the correct amount of liabilities from the assets when looking at their balance sheet in order to understand the overall financial health of their business.

One of the ways that entrepreneurs can ensure the accuracy of their invoices, is by tracking the orders that they make from the beginning to the end so that they can verify very easily the accuracy of their invoices says Edmonton bookkeeping. The first thing that entrepreneurs need to do, is keeping a copy of the purchase order that they will receive when they make any order from their vendors. Not only will this purchase order include a number to track the order with, but most importantly it will have a list of all the items ordered, along with the quantity and unit number.

When an entrepreneur starts receiving that order in their business, they should ensure they have their purchase order on hand, in order to compare it to the receiving report. The receiving report will have a list of all of the products that are being shipped. By comparing that to the purchase order, a business owner can verify that everything that is being received was ordered. If a company has shipped a partial order, Edmonton bookkeeping says that means that multiple receiving reports will be required, an entrepreneur should keep all of the receiving reports together with the purchase order so that they can verify all of the products that were ordered were received. This is extremely important especially when the person that is receiving the products is not the person that placed the order. Having the system in place before an entrepreneur has multiple employees can help ensure the systems are in place before they are needed.

Finally, an entrepreneur will receive an invoice showing the total amount of money that an entrepreneur owes their vendor. Again, they should verify that the list of products listed on the invoice is what was shipped and the amount of money that is listed on the invoice is the amounts that the entrepreneur is expecting when compared to the purchase order. Edmonton bookkeeping says that when business owners do this, they can be certain that the invoices accurate, and that will cause no delays in entering the invoice into their accounting software. By ensuring that there following this method, entrepreneurs can quickly enter invoices into their accounting software soon as they are received, to ensure the accuracy of their balance sheets on an ongoing basis.