Accounting Q:

[lquidfire]

Hi all,

I run a small business where I make products, which I then ship (locally and internationally). I would like to know how to properly do the following in my bookkeeping (currently a spread sheet, but I am considering Sage One to facilitate VAT).

When I receive a payment for an order, it obviously includes shipping. Especially on international orders this can be quite a large amount.
This shipping I would like to immediately "deduct" or spend on the books. Why? Because then, when I look at the cash flow or Income Statement document, I get a more real idea of where I currently stand, as the shipping cost will be spend in the next few weeks anyway. Having an overview minus that future expense helps me make other business decisions (e.g. marketing decisions) now.

However, the money has not been spent yet (I haven't paid the shipping provider yet). So, this isn't really an expense yet, but a sure future one. Yet, I would want to have this written off for the sake of my overview. What is the correct way to do this?

Thanks all!


P.S.: Sorry I forgot to write a proper thread name, and now I can't edit it *facepalm*

 

[DapperDanMan]

In Excel, just create an extra column?

 

[Sinbad]

Those would be accrued liabilities or expenses.

 

[Avbob se stoep]

Hi all,

I run a small business where I make products, which I then ship (locally and internationally). I would like to know how to properly do the following in my bookkeeping (currently a spread sheet, but I am considering Sage One to facilitate VAT).

When I receive a payment for an order, it obviously includes shipping. Especially on international orders this can be quite a large amount.
This shipping I would like to immediately "deduct" or spend on the books. Why? Because then, when I look at the cash flow or Income Statement document, I get a more real idea of where I currently stand, as the shipping cost will be spend in the next few weeks anyway. Having an overview minus that future expense helps me make other business decisions (e.g. marketing decisions) now.

However, the money has not been spent yet (I haven't paid the shipping provider yet). So, this isn't really an expense yet, but a sure future one. Yet, I would want to have this written off for the sake of my overview. What is the correct way to do this?

Thanks all!


P.S.: Sorry I forgot to write a proper thread name, and now I can't edit it *facepalm*

Hi there, I just want to make sure that we are on the same page. Do you have any accounting background? You mentioned you work on excel, so I just want to make sure you have a complete trail balance and everything setup, and that you know the difference between balance sheet and income statement accounts.

 

[rh1]

I had to reread your requirements, I dont think you need an accountant? Accountants can advise. Is this what you mean?

 

[lquidfire]

Those would be accrued liabilities or expenses.

Thanks, Sinbad.

I had read about that on investopedia, but didn't think it would apply because I have actually not yet incurred the expense?

Hi there, I just want to make sure that we are on the same page. Do you have any accounting background? You mentioned you work on excel, so I just want to make sure you have a complete trail balance and everything setup, and that you know the difference between balance sheet and income statement accounts.

Thanks avbob. I have no background or much knowledge of accounting. I am using TaxTim's Company Workbook, which generates an Income Statement as well as a Balance Sheet. But that's just for generating, not for knowing really why and how...

Just for completeness sake: I am very willing to acquire the necessary understanding of accounting and bookkeeping so that I can do all this properly, for the well-being of my business (and also for the sake of the accountant whom I will need at some point as the business is growing).

 

[Sinbad]

Thanks, Sinbad.

I had read about that on investopedia, but didn't think it would apply because I have actually not yet incurred the expense?



Thanks avbob. I have no background or much knowledge of accounting. I am using TaxTim's Company Workbook, which generates an Income Statement as well as a Balance Sheet. But that's just for generating, not for knowing really why and how...

Just for completeness sake: I am very willing to acquire the necessary understanding of accounting and bookkeeping so that I can do all this properly, for the well-being of my business (and also for the sake of the accountant whom I will need at some point as the business is growing).

Once incurred it's not accrued any more. Accruals allow for future expenses to be accounted for in the present period. Look at accrued expenses, not accrued liabilities.

 

[Avbob se stoep]

Thanks, Sinbad.

I had read about that on investopedia, but didn't think it would apply because I have actually not yet incurred the expense?



Thanks avbob. I have no background or much knowledge of accounting. I am using TaxTim's Company Workbook, which generates an Income Statement as well as a Balance Sheet. But that's just for generating, not for knowing really why and how...

Just for completeness sake: I am very willing to acquire the necessary understanding of accounting and bookkeeping so that I can do all this properly, for the well-being of my business (and also for the sake of the accountant whom I will need at some point as the business is growing).

Thats a difficult one then, you will have to gain a bit of accounting knowledge. Just to understand Assets, liabilities en Equity, and how transactions move between these types of accounts. Then the accruals will also make more sense as Sinbad mentioned.

 

[lquidfire]

Thank you for your answer. Are there any resources that you can recommend for SA? I frequently find that the info is geared towards the US when I look online.

A good text book is fine, too.

 

[Avbob se stoep]

Thank you for your answer. Are there any resources that you can recommend for SA? I frequently find that the info is geared towards the US when I look online.

A good text book is fine, too.

I think this channel might help you. There is a part 1, 2, 3, 4 and 5. I have not myself watched it, but this guy seems African enough and I believe most African countries use the same International Financial Reporting Standards. As usual the US uses something different, Generally Accepted Accounting Principles, which differs in some places from IFRS that we use in South Africa.

 

[lquidfire]

Thanks! Thanks also for mentioning IFRS, gives me something to look out for.

 

[Vegeta]

Buy accounting software. Sage One Xero or Zoho Books.(no particular order of preference see what you like)
Atleast it does basic Accounting for you and they have very affordable pricing options especially Zoho