New Financial Year, New Financial Habits

Help us help you get your business financials set up right

account set up with xero online training learning course
Taking time to set up your accounts correctly at the outset and recording your reconciliations regularly will save you time, money and a nasty, aching headache!

SO WE’RE INTO THE new Australian financial year. With the start of each financial year comes the chance to right last year’s financial habits and avoid repeating them again. You know what they say about people who repeat the same actions over and over again expecting different results …

If you had a crazy end of financial year, try starting off the next 12 months (well, 11 now, can you believe it!) on a positive footing, with these good financial habits.

Check your accounting software is set up correctly

Something that causes businesses and their owners countless headaches at tax time is accounting software that’s been setup incorrectly or not set up completely. Transactions that are coded wrong or bank feeds that are connected to the wrong account — or too few accounts — can leave you in the middle of a bookkeeping nightmare come June 30.

Spend some time sorting this out, or employ a bookkeeper to get you set up correctly. It’s worth that little bit of extra time now to get it right, truly!

Aim for daily reconciliations

Reconciling your business accounts regularly is important for a number of reasons, fostering good habits being chief among them. You may not need to reconcile your accounts each day, but it’s certainly a lot easier to find 10 or 15 minutes two or three times a week, rather than two or three hours once a month. The most often you do your bookkeeper the more unlikely it is that you’ll leave it pile up, eventually requiring costly rescue bookkeeping. You’ll also have a much better picture of your business’s performance with current accounting data.

Monitor cash flow

Positive cash flow is the marker of a healthy business. Negative cash flow is not. There are plenty of seemingly profitable businesses suffering negative cash flow that threatens to put them out of business. Don’t let yours be one of them. Create your own cash flow forecast reports in Excel or use a cash flow forecasting or expense app to determine if you’ll have enough money in the bank to meet your ongoing commitments (which includes paying yourself a living wage to meet your personal commitments).

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Our cloud accounting training courses will show you how to set up your accounting software correctly. Learn how to use Xero, Quickbooks or MYOB with our online training courses and be able to invoice customers on time, reconcile your account and run financial reports, including cash flow statements. Visit our website for more information.


cashflow reports in xero and excel

Xero for less…

Our Xero online training courses include EVERYTHING for ONE LOW PRICE. Furthermore, if you select our Lifetime Membership option, you’ll have LIFETIME access to our ongoing course updates. All EzyLearn courses are accredited by the Institute of Certified Bookkeepers (ICB) and can be counted towards Continuing Professional Development (CPD) points. Find out more about our Xero online training courses. 


 

Which Transactions Affect Balance Sheets?

Avoid Any Nasty Surprises: Balance Sheets Matter!

EzyLearn Xero Balance SheetA business’s balance sheet is a snapshot of its financial position at a particular period of time, which is not to be confused with a profit and loss (P&L) statement. Unlike a P&L, which just shows whether the business is making a profit or loss during a given period, a balance sheet, will eventually, show nearly every activity that has occurred within a business.

However, there are some transactions that will show up immediately. You’ll learn how to run a balance sheet in our Xero Daily Reconciliations Training Course, but we wanted to show you the transactions to look out for and why.

profit and loss statement xero online training course
A balance sheet reveals the nitty gritty of your business’ transactions.

The purchase or sale of assets

When an asset, such as a car, is bought, it will reduce the cash account and increase the fixed-assets account. Both of these accounts are listed in the asset portion of the balance sheet, however, cash is part of the current assets section and fixed assets are part of the long-term assets section.

When an asset is sold, the way the cash is accounted for is a bit more difficult. Here, both the asset’s book value and any accumulated depreciation are removed from the books at the same time that the cash account is increased by the sales price. If the sales price does not equal the book value, the difference is accounted for as a gain or loss on the sale of equipment. This gain or loss is recorded on the P&L statement.

Purchases on credit

When a business purchases supplies or inventory on credit, the business will debit the asset account (supplies or inventory) and credit the accounts-payable account. Almost always, accounts payable are considered to be current liabilities and are shown at the top of the liabilities section of the balance sheet.

Debt and lease arrangements

When a business issues debt or enters into a leasing arrangement, a liability must be recorded in the long-term section of the company’s balance sheet. For example, if a company issues bonds for cash, the company would debit cash and credit bonds payable in the simplest bond-issuance scenarios.

Capital-lease transactions affect the balance sheet in a similar manner. When entering a capital-lease arrangement, the business will debit a fixed-asset account to show that the company has taken economic possession of the leased asset. At the same time, the business will credit a capital-lease obligation account to show the offsetting economic liability.

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For a balance sheet to be correct, you must code each transaction correctly in your accounting software. Our Xero Daily Reconciliations Training Course covers balance sheets, and much, much more. Why not enrol today?

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Online bookkeeping accounting training courses for CPD points

EzyLearn Excel, MYOB and Xero online training courses count towards Continuing Professional Development (CPD) for bookkeepers and accountants. We’ve been an accredited training provider of the Institute of Certified Bookkeepers ever since the organisation started in Australia. Find out how CPD points can be of benefit to you.