Free Online Accounting Training
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For my U.S. visitors, Conceptual Framework of Canadian GAAP
D.3 Four Implementation Principles ... and |
*resource used for the overview of this accounting training, Intermediate Accounting 7th Canadian Edition by Nelson, Conrod, Dyckman, Dukes, and Davis
What you will find in "The Training" section
Practical training instructions for the work from home business owner. Each article is written in an easy to understand manner intended to help you run your business efficiently and effectively ... because the numbers do matter.
Just click on any underlined title of your choice and you'll be taken right to the article.
Things To Become Familiar With
- Cash Flow Statement Essentials
- Basic Ratio Analysis - Some Quick Accounting Training
- Are You Profitable? - More Quick Accounting Training
- Online Accounting Training and Tutorials
Are you looking to further your bookkeeping knowledge through online bookkeeping courses? ... Or perhaps you are looking to become a certified professional bookkeeper?
In this chat, you'll find information I found on:
- Bookkeeping courses for non-accountants
- Practice bookkeeping tests ... to help you prepare for certification
- US and Canadian bookkeeper certification programs
Not every source I found was online ... some mail the information to your home. Some of the information is free ... some is priced affordably ... and others will require an investment in yourself.
How to Supervise Your Bookkeeper
Every business owner should learn how to perform a monthly financial review as a way to stay in touch with your numbers and reduce the potential for fraud.
This article provides some basic accounting training ... and teaches you how to supervise your bookkeeper's work ... from a management perspective.
When you have completed the article, you should know how to determine if your financial statements are accurate.
Developing this management skill will bring you a level of assurance that you are basing your business decisions on sound data.
Periodic and perpetual inventory are explained ... and a bad habit to avoid with your accounts payable.
Basic Bookkeeping Forms as a Learning Aid
Sample financial reports because sometimes a picture is better than words ... for those who learn by seeing. These bookkeeping forms are a reference point for producing your own financial statements.
How to Read Your Financial Statements
Learn how to read your financial statements and evaluate the information to uncover your business's financial health, problems, and potential outlook.
Also includes a chat on whether you need GAAP/ASPE financial statements... or can you use other comprehensive basis of accounting (OCBOA) such as income tax basis.
Learn why it matters that you understand your income statement.
Learn how profit and loss is different than cash flow. Discover how you use this financial statement to improve your bottom line. The mystery unfolds! ...
You'll also find four sidebar chats:
- How to record the bookkeeping entry when you extend a customer credit ... and the bookkeeping entry when a customer makes a payment on account
- Yearend journal entries for periodic inventory
- How to determine if a transaction should be expensed or capitalized
- Is it depreciation or amortization?
Here are links to individual items on the income statement:
Revenue COGS and COGS formula Gross Profit Operating Expense
Operating Income Other Income and Expense Net Income
Learn why it matters that you understand your balance sheet. Then discover what it reveals about your business finances. The mystery is about to unfold!
You'll find accounting training chats on:
- International Financial Reporting Standards and Accounting Standards for Private Enterprise coming in 2011
- Bank reconciliations ... what is a bank reconciliation and the purpose for performing one.
- Prompt invoicing of accounts receivable and monthly statements sent out.
- How to book your loan payment
- A "cheat" table summarizing debits and credits ... for those who mix them up.
Here are links to individual items on the balance sheet:
Assets Accounts Receivable Inventory Count Inventory
Capital Assets Liabilities Equity
I have spent some time scouring the internet looking for sites that are designed for business people without an accounting background … non-accountants.
Three sites that provide excellent basic accounting training for small business owners that do not have a financial background are:
... for people seeking online accounting degrees, this site lets you search for online schools by zip code or by state.
Criteria to Hire An Accountant
While this is not specifically related to online accounting training, it may help in hiring an accountant if you don't want to get trained in accounting.
If you click on the online accounting degrees link above, check out the tab on Types of Accounting. It gives good explanations of the various specialties within the accounting industry which could help you hire the right type of accountant for your purposes.
How to Start a Business Guide.com has some criteria on how to find a professional accountant that is practical. It's useful to learn what is important when selecting an accountant.
The next three chats are overviews on topics that will eventually be expanded upon.
Quick Accounting Training
Cash flow is a barometer of your business’ health. As long as you have cash flowing in and out of your business, you can keep the doors open for business, even if you are not profitable.
Here's some quick accounting training ... a fast manual method (you could do it on a napkin if that's all you have available) of calculating your cash flow:
- Get your cash on hand from your latest bank statement.
- Add (+) your expected cash receipts (how much money you think will be coming in the door) for the next _______ ( you fill in the blank for the time period - a week, a month, a quarter, a year) ...
- Subtract (-) your cash disbursements (money you estimate will be paid out to cover fixed and variable expenses) for the next _______ ( you fill in the blank for the time period - a week, a month, a quarter, a year) ...
- Add (+) in any saving account balances your business has ...
- Subtract (-) your GST/HST funds collected and held in trust for the Receiver General ...
- Subtract (-) your provision for income taxes so you have funds due at tax time ...
- Equals (=) projected cash at the end of the period.
If the amount is positive, you will have cash on hand.
If it is negative, I hope you have overdraft protection on your account because you are going to be short of cash.
Cash flow expert Michael Nolan recommends an 8 week cash flow forecast in his April 10, 2009 New Hampshire Business Review article titled, "How to get control of your cash flow". Mr, Nolan suggests paying attention to detail and striving for accuracy. Why? "The better we forecast the better we will understand the sources and uses of the funds in this organization."
You can find more on cash flow here.
Quick Accounting Training
Go beyond the basics of learning to read and understand your financial statements. Learn what ratio analysis can tell you about your business and how to act on what is uncovered.
Ratios on their own don't have a lot of meaning. They become a very useful tool when the calculations are compared over a number of years as trends start to become evident.
Generally there are five types of ratios that we will be looking at:
- Liquidity Ratios - resources available so you can pay your bills
- Operating Ratios - how efficient you are at managing your capital
- Profitability Ratios - your ability to control expenses and earn a return on your investment in the company
- Leverage Ratios - percentage of debt in your company indicating suppliers' protection or whether you can take on more debt.
- Solvency Ratios - the chance that you may go bankrupt
So fill up your teacup and let's get started on this quick accounting training session.
Liquidity Ratios
For now, let's start your accounting training with a look at your working capital and your current ratio.
(The larger this number is, the better. If it equals zero, you have no working capital.)
(The higher this ratio is, the better. If it equals one, you have no working capital.)
These two calculations are measuring your business's liquidity. They calculate whether your business can meet their debt obligations when they become due. The more cash you have, the more likely you will be able to make it through the tough times or the next recession.
In easy to understand language, these calculations determine whether you will be able to meet your payroll, pay your suppliers, and pay down your loans on the agreed upon payment schedule.
As a small business owner, you can improve/manage your working capital by increasing your current assets and/or decreasing your current liabilities.
Operating Ratios
Now let's continue this accounting training by turning our attention to your accounts receivable (AR). Two useful ratios you might want to calculate are:
(This number shows you the average number of times your AR turned over (collected) in a year compared to sales.)
To calculate this ratio you need two pieces of information.
Credit Sales are the sales reported on your income statement that were paid by extending credit. If you don't have the split, you can use your total sales but the calculation will not be as accurate.
To calculate your average receivables, take your AR balance at the end of last month + your AR balance at the end of the same month last year. Now divide by 2 and you have your average AR for the year.
A higher ratio infers that you are successfully collecting from your customers ... and that you have tight credit policies ... or your business deals mainly on a cash basis.
A lower ratio indicates problems and infers your customers are not paying you on a timely basis or overstocked inventory. You may experience cash flow crunches due to late or non payments. Also, the longer an account is outstanding, the more risk to you that it will not be collectible.
While there is no actual standard for this ratio due to the unique circumstances of each business ... you can sometimes find a standard for your industry to compare against.
(This shows you the average number of days it took for your customers to pay you. As you can see, it is based on your previous calculation. If your turnover calculation is wrong, this ratio will be wrong as well.)
If your answer comes in under 30 days, then you know your customers are paying their accounts on time.
The faster you collect your receivables, the better. When customers pay you, you will be able to pay your suppliers on time or buy new product. When receivables are paid quickly and on time, there is less risk to you and your business.
If it is taking longer than 30 days for your customers to pay you, you need to take action. Your business could get in serious trouble if your accounts receivables are not actively managed. Consider implementing these collections procedures so your AR does not get away from you.
You might also want to calculate the bad debt to sales ratio. Simply divide your bad debt expense by your credit sales. This ratio measures your expected uncollectible AR. If it is increasing, it indicates a future write-off is possible.
I'll continue your accounting training by discussing other ratios over the coming weeks ... just remember, ratios are most useful when looked at over a number of periods ... so you can identify trends ... and be proactive if necessary.
Available to Purchase
- Financial ratio and analysis worksheets
- Break even, contribution margin and cost-volume-profit worksheets
- Depreciation and amortization worksheets
- Financial statement worksheets
- General business forms
This package saves you the time of creating these worksheets yourself and makes getting your accounting training easier on you. It will reduce the likelihood of a calculation logic error (but not necessarily clerical errors). Click here to view more details.
This product has a 90-day money-back guarantee, no questions asked. I have not purchased this particular product, but I have purchased his accounting package. The accounting package is a good accounting training study product. (I used it to study for my Certified Professional Bookkeeper exam.) I am also a fan of his website. It is because of this that I decided to become a compensated affiliate.
Some More Quick Accounting Training
Business coach Susan Martin from Business Sanity.com explains a quick method of calculating your profitability manually in "Computing Business Profitability".
I like it because it teaches you how the numbers from your financial statements work (it's painless and relevant accounting training) ... instead of just relying on your computer to spit the numbers out for you. Think of it as a way to proof your financial reports.
For those of you keeping manual books or who don't have regular financial statements, it's a great way to determine if you are making money ... instead of waiting for your accountant to give you the big surprise at year-end.
Here is Susan's method ... I've modified it slightly so that you have more of a template that you can setup and use all the time ... plus I snuck in one more calculation so you also have your owner's equity.
On a clean sheet of paper ... or create your own bookkeeping worksheet template in an Excel spreadsheet ... with your accounting ledger at hand (you do need fairly up-to-date record keeping to use this method):
- Make six columns across the top and call them Account, Jan 1, Today, Change, Plus, Minus.
- Under the Account column, write down:
- chequing
- savings
- accounts receivable
- inventory (at cost)
- goods in process (at cost)
- capital assets
These are your assets (what your business owns) so mark the next line with Total Assets. - Continue under the Account column, skip two lines ... then write down:
- accounts payable (include tax payable accounts like GST)
- credit card
- loans
These are your liabilities (what your business owes) ... so mark the next line with Total Debt. - Under the Account column again, skip two lines and write Owner's Equity.
- Under the Jan 1 column, write down the opening balance on Jaunary 1 for each of the accounts you listed above. Your opening balance should be the same as your December 31 closing balance.
- Under the Today column, write down today's balance for each of the accounts you listed above.
- Subtract column three from column two ... show the change as a positive or negative number in the Change column.
Your (rough) income statement:
- For your asset accounts (cash, accounts receivable, inventory and goods in process, capital assets) do this:
- If the account balance is larger now than at the beginning of the year, put the calculated change in the Plus column.
- If the account balance is smaller now than at the beginning of the year, put the calculated change in the Minus column.
- For your liability accounts (accounts payable, credit card or loans) do this:
- If the account balance is smaller now than at the beginning of the year, put the calculated change in the Plus column.
- If the account balance is larger now than at the beginning of the year, put the calculated change in the Minus column.
- Total the Plus and Minus columns.
- Subtract the Minus Column from the Plus Column ...
- A positive balance means you are profitable .. Whoo hoo!
- A negative balance means you are losing money. :0(
Accounting training made easy! Now for the extra calculation I snuck in ...
Your (rough) balance sheet:
- Under the Today column, add up your assets and write the number down on the line I had you mark as Total Assets.
- Under the Today column, add up your liabilities and write the number down on the line I had you mark as Total Debt.
- Under the Today column, if you subtract your Total Assets from your Total Liabilities, you have your Owner's Equity (how much you have invested in the business ... not to be confused with the value of your business).
I'm not sure if you figured it out ... but the Plus column is Debits and the Minus column is Credits. You can find a "cheat table" on Debits and Credits on a sidebar in my article on the balance sheet.
Now this mini accounting training lesson wasn't too bad, was it?
Susan Martin offers financial management coaching services (relevant accounting training) for small business. You can contact her through her website. I have not used her services, but I like her blog and management articles.
P.S. The more you practice doing this mini accounting training lesson, the more likely it will be that you will begin to intuitively understand the numbers that drive your business.
P.P.S. If you liked this sidebar, you might also like this quick method of estimating your cash flow.
There are so many business skills to learn about when running your own business. You may not need formal accounting training but developing financial skills will help you beat the odds of still being in business five years from now.
To your ongoing business success!
The Training - Links
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Return to Home Page - Freedom is the Goal, Right?
