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What do I need to know about accounting?

bexio supports you with and simplifies double-entry accounting. Do not worry if you are not yet sure what double-entry accounting is. This report will explain the topic to you in greater detail.

 

This report explores the following aspects of bexio accounting:

 

You can find a glossary of the most important terms at the end of this report. It is intended to provide a basis for understanding if anything is unclear.

 

Why keep accounts?

 

Every company has stakeholders it interacts with. For example, you issue an invoice to your client or have to fill out a tax declaration for the state. Other stakeholder groups include suppliers, employees and investors. You must document all interactions with your stakeholder groups; accounting can assist you with this. Proper accounting helps you keep an overview of your finances. Keeping an ongoing record of your incoming and outgoing payments is one of the main tasks of accounting.

 

Correct and timely accounting is intended to provide you with information on your financial situation. This means you can see at any time how much money (liquid) assets) you have in your accounts and how much debt (borrowed capital) you

have. It also shows you your profit/loss so you always know how well your business is going and whether the work you are doing is paying off. Accounting also provides a basis for your tax declaration and for your VAT statement.

 

Who is obligated to keep accounts?

 

According to new accounting legislation (effective 2015), it is mandatory for the following companies to maintain financial accounts.

 

Joint stock corporations (AG)

Limited liability companies (GmbH)

General and limited partnerships

Sole proprietorships whose revenue exceeds CHF 500,000.

 

Principles of proper accounting

 

According to the Swiss Code of Conduct (OR 957a para. 2), the principles of proper accounting are as follows:

- Full, truthful and systematic recording of business transactions and circumstances

- Documentary evidence of individual accounting processes (no account entry without supporting document)

- Clarity, comprehensibility

- Expedience (aligned to type and size of the company)

- Verifiability

 

Areas of accounting

 

Accounting can be divided into the two main areas of financial accounting and cost accounting. bexio can help you maintain your financial accounts. In addition to the main areas there are the appropriate auxiliary statements, where bexio can assist you with accounts payable and accounts receivable, for example.

 

 Main area

 Auxiliary statement

 Financial accounting

·       Recording ongoing business transactions

·       Income statement

·       Balance sheet

·       Accountsreceivable

·       Accountspayable

·       Cash-based accounting

·       Stock / materials accounting

·       Inventories

 

Glossary

 

Below is an overview, in alphabetical order, of the key accounting terms and their descriptions.

 

Assets

Assets are listed in the left-hand (debit) side of the balance sheet. There you can see where your money is invested, for example in your bank account (bank), as stock in your warehouse (inventories) or as office furniture (movable property) and buildings (real estate).

Opening inventory

All balance sheet accounts have an opening inventory. This is transferred from the opening balance and is the starting amount on the account.

Fixed assets

Fixed assets are primarily items that are in your possession for a long time, e.g. office furniture (movable property), land and buildings (real estate) or cars (vehicles).

Expenditure

Expenditure comprises all costs incurred by a business activity, e.g. advertising costs (advertising expenditure), personnel costs (wage expenditure) or lost value of items (depreciation).

Balance sheet

The balance sheet is the comparison of assets and liabilities, meaning it shows where you have invested your money and where your money is coming from. The balance sheet must always be balanced (assets must equal liabilities).

Accounts receivable

Accounts receivable or trade receivables are, so to speak, all invoices you have issued but have not yet been paid by your customers. Accounts receivable thus show you how much money you are owed by your clients.

Double-entry accounting

Double-entry accounting describes a form of accounting where every entry to an account requires a corresponding and opposite entry to a different account (e.g. debit and credit). This results in a balance sheet and an income statement, and your profit is reported in each.

Equity

Equity refers to assets that you have invested in your company yourself, or share capital in the case of a joint stock corporation. Typical assets include money, vehicles and real estate.

Opening balance

The opening balance is the balance that is recorded right at the start of the year. The opening inventories for opening the accounts are appropriated from this. It must correspond to the closing balance of the previous year.

Income statement

The income statement compares your income to your expenditure in order to determine whether you have made a profit or a loss.

Income

Generally speaking, income is all of the money you take in, e.g. goods sales from goods delivered or service revenue from services provided.

Liquid assets

Liquid assets include all accounts in which money is effectively held (i.e. cash, post office and bank accounts).

Borrowed capital

Borrowed capital is essentially debt, e.g. outstanding vendor invoices (creditors), your bank account if it is overdrawn (bank debt) or a loan you have taken out (loans payable).

Credit

The credit side is the right-hand side of an accounting ledger.

Accounts payable

Accounts payable are debt you have or debt that arises due to invoices that have not yet been paid.

Value added tax (VAT)

VAT is in principle an indirectly applied consumption tax, i.e. it is paid by the consumers of a product or a service.

VAT according to stipulated renumeration

If you settle your accounts using the VAT method according to stipulated renumeration, you record your VAT at the same time you issue your invoice.

VAT according to collected renumeration

If you settle your accounts using the VAT method according to collected renumeration, you do not record your VAT until you have received payment.

Liabilities

Liabilities are the right-hand (credit) side of the balance sheet. It shows you where your money comes from, i.e. whether it is debt you have incurred (borrowed capital) or whether it is assets you have invested in the company (equity).

Balance

All profit and loss accounts (i.e. accounts in the income statement) have a balance. This is the amount on the account at the end of the accounting period and is subsequently transferred to the income statement.

Closing inventory

All asset and liability accounts have a closing inventory. This is the amount on the account at the end of the accounting period (like the balance on the profit and loss accounts) and is subsequently transferred to the balance sheet.

Closing balance

The closing balance is the balance at the end of a given year.

Debit

The debit side is the left-hand side of an accounting ledger.

Current assets

Current assets are assets that are available at short notice, e.g. the money in your bank account or the goods in your warehouse.

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