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Introduction to Bookkeeping Beginner Basics: The Chart of Accounts

We created a free educational guide, called Introduction to Bookkeeping Beginner Basics, which is available to download from the EzyLearn website, and to complement that guide, we’ve been publishing a series of blog posts, also titled Bookkeeping Basics. We’re now three posts in, and we’re going to be look at the chart of accounts, which is the foundational element of every business’s accounting system. The Bookkeeping Basics guide will take you through how to set up a chart of accounts in your accounting software, whether you’re using Xero, MYOB or QuickBooks, while this blog post is going to explain why it’s important.

What is a chart of accounts?

The chart of accounts (COA) is an organisational tool that lists every account in a business’s account system. In the context of bookkeeping, ‘account’ is used to refer to a unique record for each type of asset, liability, equity, revenue and expense. So a chart of accounts, then, is just a system that organises your finances so that your reports make more sense and you can easily see the financial health of your business.

A well-designed COA helps the business to comply with financial reporting standards, and should be flexible enough so that a business can tailor its chart of accounts to best suit its needs. Within the categories of operating revenues and operating expenses, for instance, the accounts might be further organised by business function or by company divisions. As such, a COA can be as large and as complex as the business itself.

Understanding your ‘accounts’

When you set up your chart of accounts, it will be organised the same way every other company does – your banks accounts come first, then all assets, liabilities, equity, income, and expenses in that order. Here’s what each of those accounts mean:

Assets:

Your accounts receivables are considered an asset, as is your income, but the two are completely different things. Accounts receivables are business claims against the property of a customer that’s occurred following the sale of goods and/or services, and income is what you have collected from the sale of those goods or services.

In other words, if you invoice a customer and give them time to pay, then that’s ‘accounts receivable’. When you collect the money and deposit it into your account, it’s ‘income’.

Learn about Accounts Receivables tasks in the Daily Data Entry Transactions courses for MYOB, Xero or QuickBooks Online.

Liabilities:

Liabilities are notes owed by the business. If you lease anything or you’re buying anything on credit – this includes suppliers who extend a line of credit to you – then it’s considered a liability.

Equity:

An equity account would be any equipment the company has paid for, or would receive money for if it is sold. Cars, machinery, and certain office equipment are all considered equity. If you had a loan on a business vehicle, the payments you make would be considered a liability, but the vehicle itself would be equity. Each time you make a payment, the liability goes down, while the amount of the equity account would increase. To keep your balance sheet accurate, you need to track both.

Expenses:

Finally, expenses are just that: the money paid by the business for the operation and production of goods and services that are paid for immediately. This includes things like stationery or fuel for a business vehicle, which are paid for at the point of sale, is an expense, where a telephone bill that allows you 14 days to pay, on the other hand, is a liability.

Why a chart of accounts is important

Whether you’re using an old fashioned pencil and paper, an excel spreadsheet, or more sophisticated accounting software, such as MYOB or Xero, it’s important to know where your money is coming from and where it’s going to. A chart of accounts is the organisational tool that allows you to do that. And it’s important to keep it up-to-date, so that, if for any reason, you want a picture of how your business is performing financially, your reports will be accurate.

This blog post is part of our Bookkeeping Basics series, which are being published to complement our new educational guide, also titled Bookkeeping Basics, which you can download for free from the EzyLearn website.

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Accounting Tutors getting ready

Accounting Tutors - online Xero, MYOB, QuickBooks, Microsoft Office Excel, Word training courses - compare airtasker, gumtree, applied education, SpotED

Don’t you just love something new? Some entrepreneurs I know call it the “shiny object” syndrome because it means you’re always focusing your time and energy on something new, rather than doing the daily drudge work. But this is exciting.

I haven’t had a chance to speak with every registrant but this image shows the EzyLearn students who’ve completed our accounting & bookkeeping courses and would love to be tutors to help other students understand how the software is used in the real world.

Continue reading Accounting Tutors getting ready
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What’s the point of a cover letter?

Get a job interview with the career academy success program, free with Xero, MYOB, QuickBooks online training courses - reason to have a cover letter with your resume

You’ve spent hours fine-tuning your resume or CV and you go to SEEK or other job boards only to find that they ask if you want to write a cover letter. You don’t really, do you? But here’s why you need to.

Continue reading What’s the point of a cover letter?
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How to get an accounting job with no experience

How to get an accounting job with no experience - Xero Course, MYOB Course, QuickBooks Course - find bookkeeping work

There are plenty of reasons that you have no experience: Changing careers, new graduate or re-entering the workforce after many years away (like when you’ve started a family and been out of the workforce as a parent). These circumstances justify your lack of experience but there are things you can do.

Our team has reviewed the features of some of Australia’s biggest job boards for accounting jobs and we’ve used some of the features that can help job seekers receive notifications when new jobs become available. There is hope and there are things you can do.

Continue reading How to get an accounting job with no experience

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Reduce stress and still earn good money as a bookkeeper

How to package your bookkeeping and digital marketing services and price yourself using value based pricing

Value-based pricing can make your bookkeeping business appear easier

To understand value-based pricing take a look at the fees charged for bookkeeping using Xero at National Bookkeeping. These fixed rates are offered to small to medium businesses to give them a clearly defined outcome for a fixed price that they can budget on.

Although the bookkeeping service is offered for a fixed price each week the bookkeeping tasks can include lots of different steps that can be quite time consuming and varied, including:

Continue reading Reduce stress and still earn good money as a bookkeeper
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Reasons Why Seek is Number 1 for Accounting Job Search

Seek Profile will help you find accounting jobs using keywords, key skills and accounting education details - Xero Jobs, MYOB Jobs

Our team did a little research into job sites for accounting jobs and thought we’d explore a bit about why people like using the major job board in Australia.

The biggest reason is that they are the biggest job board in Australia so most advertisers spend the little bit extra to promote their positions available at the site. But there are some great tools for job seekers to be registered on the site. Continue reading Reasons Why Seek is Number 1 for Accounting Job Search

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FREE Digital Marketing Seminar Presentation

Steve Slisar explains how EzyLearn holds onto page 1 of Google for free organic searches for Xero Courses, MYOB Courses, Excel Courses, QuickBooks Courses and more

Happy New Year and I hope you earn more in 2019

Setting goals is not just about earning more money but at this time of year many people spend their time thinking about how much they want to earn and what type of work they want to do.

Although earning money seems like a goal the real goals you should be setting are more practical and relate to what’s currently going on in your life. We’ve been working on some new initiatives and I hope you take advantage of them to have an extra source of income. Continue reading FREE Digital Marketing Seminar Presentation

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Learn Xero in less than 5 days

Learn how to master Xero in less than 5 days

Xero is complicated, let’s be honest. I know that Xero tell you the software is beautiful and simple to use but in reality it’s accounting software and if accounting software was easy then everyone would have their BAS’s lodged on time and have no credit risk issues.

It also depends on what kind of past experience you’ve had with accounting and bookkeeping work, but there is a way to up-skill in Xero quickly.

Continue reading Learn Xero in less than 5 days

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Just be yourself

Silly Season Online Training Course Special Offers for Online Training Courses in Xero, MYOB, Excel, WordPress, Digital Marketing, Microsoft Office Skills

If you’re looking for a job it’s a daunting process because you have to sell yourself to an employer and most people don’t have to do this very often. Parents returning from parenting can find it particularly daunting because they’ve found themselves surrounded by nappies, cleaning, cooking and washing and the thought of presenting themselves to other adults can be scary.

I’ve spoken to some EzyLearn students in the last couple weeks about our Accounting Course Tutor Initiative and have been impressed at how capable many of them (you) are!

Continue reading Just be yourself

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Are You Finding Xero’s New Navigation a Pain in the Proverbial?

Xero short courses, training courses updates - new navigation released in November 2018 - Dashboard, Business, Accounting, Organisation

My first thought when a software company changes its navigation (in a significant way) is that there were issues with the previous version.

THIS BLOG POST comes in the wake of Xero promising to improve their navigation in October 2018. Xero has now subsequently released those changes and our online support team are receiving lots of requests for help!

First and foremost, if you’re an EzyLearn student, please note that we’ve already created an update addressing the navigational updates and this is available in all of our online Xero Training Courses.

Continue reading Are You Finding Xero’s New Navigation a Pain in the Proverbial?

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How Long Does it Take to Write a Blog Post?

Need something written blog writing freelance writing business writing

THE TRUTH IS, writing a blog post takes time. If it were the case of just writing some sentences, it wouldn’t take that long at all.

But what’s the point of that? The last thing you want to do in a busy, information-saturated world is waste people’s time. It’s an insult and you’ll put them off.

After all, these people have given up time in their busy days to read what you have to say. Don’t ruin this special relationship forever by churning out rushed, poor quality content or waffle.

Always think: What’s in it for them? Continue reading How Long Does it Take to Write a Blog Post?

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How Does QuickBooks Compare with Xero?

smiling woman using online quickbooks and xero accounting software

ONE WOULD THINK that an accounting software program that is actually developed by accountants would be the best. However, some believe that the user experience is better with QuickBooks and Xero.

We’ve previously blogged about how QuickBooks accounting compares with MYOB. We’ve also done a comparison of all three accounting programs — MYOB, Xero and QuickBooks.

In doing so, it’s interesting to note that QuickBooks, for small business owners, at least, was the clear winner against MYOB in terms of reporting and user experience. But how does QuickBooks stack up against the increasingly-popular Xero? You may be surprised at the results.

Continue reading How Does QuickBooks Compare with Xero?

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Are You Living Your Best Life?

smiling woman who works from home

COULD YOU EARN a second income by running a website? Thousands of Australians already are; if you have bookkeeping or creative skills, perhaps it’s suited to you too.

Most people now know that the old way of working — long hours in an office at a job they don’t really enjoy — is not living their best life. And simply dreaming of a better one simply won’t cut it, but there is a way. Continue reading Are You Living Your Best Life?

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Announcement: Excel Course Spreadsheet Says Yes to Granny Flat Investment – Now Included

Granny flat manufactured home development for property investment

MAKING THE DECISION whether to take the risk and invest in anything is hard. However, when you put the information in an Excel spreadsheet, it soon becomes very clear whether it’s worth doing.

Once you decide it’s worth going ahead, you can use Microsoft Excel to create a Gantt Chart of the project to make sure it happens right as planned.

The EzyLearn COMPLETE Excel Beginners’ to Advanced Online Excel training courses include sample exercises files which will show you specifically and exactly how much you can borrow to invest in property (including a granny flat). Also included is a Gantt chart to help you with project management. Continue reading Announcement: Excel Course Spreadsheet Says Yes to Granny Flat Investment – Now Included

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Expression of Interest: Earn Money as an Accounting Course Tutor

young man studying accounting training course tutor mentor coach

CONTINUOUS IMPROVEMENT IS fundamental to our online training courses. Part of this is the way we systemise our course support so we can be super-responsive and detailed.

We’ve learned where the headaches tend to occur and where students encounter the most problems. We generally have an answer to every question. However some students would still like the option to speak directly to someone currently working in their industry of study and that’s where this program comes in. Continue reading Expression of Interest: Earn Money as an Accounting Course Tutor

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Xero Expenses – Most Beautiful Accounting Software of All?

Xero Expenses Management changed after they purchased Hubdoc to compete with Receipt Bank - Xero Beginners Training Course

MANAGING EXPENSES AND capturing source documents, like receipts, is the bane of most accounting department managers. But can this now be done with ease?

Before I sold the business for AccessID/EzyAccess Safety Management software, I used the business credit card for all business-related expenses. However, credit card or not, the Financial Controller for our financial team was constantly asking for hardcopy or electronic receipts.

Whether you’re a bookkeeper or business owner, receipt filing (and filing in general) can easily get on top of you. This wouldn’t be so bad if it wasn’t such an important part of running a business.

Some bookkeepers and business owners defer to tradition and print each invoice, bill or other expense and then file the hard copies — but there is a better way. Continue reading Xero Expenses – Most Beautiful Accounting Software of All?