Idiots guide to basic bookkeeping wanted please

downshifter

Has anyone got or seen a very basic guide to very basic bookkeeping for a very basic person please?

A voluntary organisation I work for has submitted its accounts for audit but they've come back saying they need also to send a bank reconciliation and the example they've sent shows cash book and bank account. We never deal with cash and so have no such book, we just have basic bank account, cheques go in (sometimes) and out (mostly) bank statement each month consists of around 4 entries.

Can anyone point me in the direction of a simple bank reconciliation? What should it look like, what sort of level of detail?

Some numbers are also shown in brackets in the example, are these minus amounts? If so, as it says less such and such an amount, why is it necessary to put them in brackets too - or is there some other reason.

Sorry if I sound dense, but I've never needed to know this before - as much as anything I think it's the terminology that's flooring me.

Thanks

DS

flea72

they basically want to see a log of the income and outgoings

so if you get cheques, they want to know where these chqs came from and for how much

then a list of what your outgoing were

balanced off against each other

cashbook doesnt just mean cold hard cash, it refers to the flow of money through the business

F

flea72

downshifter wrote: »

Some numbers are also shown in brackets in the example, are these minus amounts? If so, as it says less such and such an amount, why is it necessary to put them in brackets too - or is there some other reasonDS

yes, brackets mean minus amounts. i think they put them in brackets so it just stands out a bit more, as its harder to overlook a bracket, than a minus symbol

F

flea72

me again

have a look at this

http://www.osbornebooks.co.uk/files/af_bookkeeping.pdf

F

Savvy_Sue

flea72 wrote: »

they basically want to see a log of the income and outgoings

so if you get cheques, they want to know where these chqs came from and for how much

then a list of what your outgoing were

balanced off against each other

cashbook doesnt just mean cold hard cash, it refers to the flow of money through the business

F

If I try to describe how I used to do a 'reconciliation' for a small organisation, that might help the OP.

When I wrote a cheque, I filled in the counterfoil, but I also put it into the books - initially a hardbacked account book, later in a simple Excel spreadsheet.

When someone paid money, I did the same: filled in a counterfoil as I prepared to pay it in, but logged each payment in the account book or on the spreadsheet.

Now, suppose I wrote a bunch of cheques out on 25th June, and paid in a bunch of cheques on 30th June. The bank statement is printed on 1st July, and it might look as if we've got plenty of money. BUT once I've gone through the statement ticking off all the items on it against the account book / spreadsheet, I find that there are cheques out and in which aren't on the bank statement.

And that matters, because once those cheques have been presented and cleared, we might be desperately short of money until the cheques I pay in have cleared into the account.

Without a reconciliation, you don't know whether what's on the bank statement reflects the actual state the organisation is in.

I hope that clarifies rather than confuses. You might do the same with your personal account!

Savvy_Sue

BTW, I wouldn't claim to be a book-keeper, but I did teach myself to keep simple accounts and reconcile them, to a standard where they could be audited. If I can do it, anyone can! :rotfl:

downshifter

Thank you so much everyone for such helpful answers. I'm still confused though. Along with the form with the basic summary information, I also sent a sheet with 4 columns, drawn up by my predecessor, which sounds pretty much like you describe. Col 1 had a list of income, then expenditure below all itemised. Col 2 has the amount in, col 3 has the amount out and col 4 has the total of income, expenditure and bank balance at 31 March. I'm going to have to get back to them to find out why this isn't what they need I think. I really don't want to have to in case they start charging us extra for my stupidity!

My personal bank account is easy so I wouldn't do this! Ie, little comes in, lots goes out, end of month will go in brackets now I know what that means!!!

Thanks again, another cup of tea then I'm really going to bottom this out

DS

Savvy_Sue

Quick phone call 'clarifying' what they were expecting shouldn't cost a lot. I'm not sure exactly what they're after: you need to be able to tell both what IS in the account at any given time, and also how much of that is already spoken for or what else is anticipated.

Our accounts program does let us print off a sheet showing what's been entered in the accounts package but not 'ticked off', maybe that's what they're after and you might be able to tell them how you check statements to achieve the same result!

downshifter

Thanks Sue, helpful as ever. I'm struggling on with this at the moment. I may just be almost there, only one bit to find now and it near enough balances and the dog needs to go walkies and I'm desperate for bed. Next time I shall make sure I've got some chocolate in.

One enormous lesson this has taught me is to keep really good records, for example I can see that my predecessor's salary for Jan, Feb, Mar was paid in April, but can't find why. I also see that her pay and expenses were all lumped together into one item, though must've been separate at some point as the tax was paid. But I can't find out where and trying to find my way round someone else's records, which actually seem very neat and sensible - is not easy.

I'm going to find a good book or basic course and really gen up on this, I don't want to be burning the midnight oil next year too. I shall also follow up the advice everyone's given me on here. I also plan to have the accounts as an item on the September meeting, to ensure that I'm not the only one who knows what's in the kitty and what isn't otherwise they'll spend merrily away!

DS

Peter1980

Savvy_Sue wrote: »

BTW, I wouldn't claim to be a book-keeper, but I did teach myself to keep simple accounts and reconcile them, to a standard where they could be audited. If I can do it, anyone can! :rotfl:

Sorry to burst your bubble, but with over six years experience of working in accounts practice, I have yet to see someone self taught, who could actually do bookkeeping properly (and in most cases they make a truly catastrophic mess of it - lamentalbly without even knowing they have done this ). The accountant then spends days trying to put this right, and often it ends up costing more than if you had just paid someone who new what they were doing, to do the job in the first place.

Put it this way. It takes a trainee with no prior experience, around 12 months to master basic double entry bookkeeping and a bank reconciliation, and that is doing it professionally, under supervision, five days a week for a full year.

Now, if you are looking to save money on accountants fees, the way you would do it is to save them time by employing a professional bookkeeper, who will generally cost less per hour than the accountant will, and will save the accountant time on the job.

TBH though, both accountancy and bookkeeping are trained professions in their own right, and are not things that you should be attempting unless you actually know what you are doing. I've seen so many cases in my time of people who were "ordered" by HMRC or Companies House to employ a professional because they had submitted accounts that didn't even balance or which were mathematically impossible, I could almost cry.

Savvy_Sue

downshifter wrote: »

Next time I shall make sure I've got some chocolate in.

Coffee and a wet towel round the head can also help.

downshifter wrote: »

One enormous lesson this has taught me is to keep really good records, for example I can see that my predecessor's salary for Jan, Feb, Mar was paid in April, but can't find why. I also see that her pay and expenses were all lumped together into one item, though must've been separate at some point as the tax was paid. But I can't find out where and trying to find my way round someone else's records, which actually seem very neat and sensible - is not easy.

NOTHING beats good records! As for the salary / expenses payments, do you do your own PAYE, or is it worth checking with whoever does payroll why 3 months were paid at once?

downshifter wrote: »

I'm going to find a good book or basic course and really gen up on this,

Notwithstanding Peter's advice, it might be worth asking the auditors for guidance, ours have been very helpful at pointing out what we need to improve each year in a time of expansion! Other places to look would be your local voluntary service council (google that plus your area if you're not aware of it, and make friends with them because they can be fantastically helpful!), local tax office and maybe Businesslink.

downshifter wrote: »

I also plan to have the accounts as an item on the September meeting, to ensure that I'm not the only one who knows what's in the kitty and what isn't otherwise they'll spend merrily away!

Most definitely! Learn to draw up a basic cashflow, how to prepare a budget, and how to show the variance between Actuals and Budget, and make sure someone - make that several people! - on the Trustees / committee speaks Accounts to that level!

Out of interest, what's your annual income / turnover? How many transactions a month are we talking about?

Peter1980 wrote: »

Sorry to burst your bubble, but with over six years experience of working in accounts practice, I have yet to see someone self taught, who could actually do bookkeeping properly (and in most cases they make a truly catastrophic mess of it - lamentalbly without even knowing they have done this ).

Fair enough, I'm talking about small voluntary organisation record keeping rather than true bookkeeping, and true, I never even attempted double entry bookkeeping, BUT my initial system had checks in it to ensure that everything was properly accounted for, AND it balanced to the penny, AND it reconciled.

A few years ago I gained a basic grasp of QuickBooks while working for a small but growing charity, and trust me, a rookie colleague and I made a better job of keeping our accounts than a so-called professional company using a 'trained' bookkeeper. We've now got someone in sorting out the mess, and they are sometimes in despair about it. But when she asks why something stupid was done, it wasn't me and my rookie colleague who did it: invariably we say "But we set it up to do X, Y and Z" and in their wisdom the 'professionals' have changed it, and guess what? Our X, Y and Z systems did what was needed at the time, and the changed system didn't.