Bookkeeping
Principles 2023
Workbook
Welcome to the Bookkeeping Principles training, with valuable insight
from Geni Whitehouse, industry expert and QuickBooks Online
ProAdvisor. This self-directed training is designed for anyone entering
the field of bookkeeping for the first time.
For use in conjunction with the online training, this companion
workbook contains:
An overview of each of the two parts in the online training
Part 1: Introduction to Bookkeeping
Ready to get started?
Lesson 1: Introduction to bookkeeping
Lesson 2: Entering transactions
Estimated time needed to complete each lesson
Lesson 3: Working with receipts
Key points to take away from each lesson
Lesson 4: Working with disbursements
Space to take notes
Lesson 5: Using financial statements to
answer common client questions
After completing both parts, you should have the expertise needed
to start work as an entry-level bookkeeper.
Lesson 1:
Introduction to
Lesson 1: Introduction to bookkeeping
Time to complete:
18 minutes
bookkeeping
Lesson 2:
Entering
transactions
Lesson 3:
Working
with receipts
Work through the following sections, making any notes
that’ll help you later.
•
Bookkeeping concepts
•
Bookkeeping vs. accounting
•
Training overview
•
What is bookkeeping?
•
The role of the bookkeeper
Lesson 4:
Key takeaways:
Working with
disbursements
•
Formally, bookkeeping is defined as “the recording,
storing, and retrieving of financial transactions for a
business, nonprofit organization, individual, and so on”
•
More informally, bookkeeping is the craft of creating
order from chaos
•
The best way to understand the role of a bookkeeper
is as someone who captures or documents the story
of a business in a language known as accounting. This
concept makes a bookkeeper both a storyteller and
a translator
•
The best stories go beyond providing historical
accuracy and influence owners to make better
business decisions
Lesson 5:
Using financial
statements to
answer common
client questions
Take notes:
Lesson 1:
Introduction to
Lesson 2: Entering transactions
Time to complete:
14 minutes
bookkeeping
Lesson 2:
Entering
transactions
Lesson 3:
Work through the following sections, making any notes
that will help you later.
•
Entering transactions
•
How to enter transactions
Working
Key takeaways:
with receipts
Lesson 4:
Working with
•
Accounting is based on a system of balances
•
Double entry accounting means that there are two
“sides” to every transaction
•
The sum of all transactions always equals zero, so every
minus needs to be paired with a plus
•
There’s a basic process you can use to decide how to
code any transaction:
disbursements
Lesson 5:
Using financial
statements to
answer common
client questions
1. First, consider the impact on cash. Is cash going in
or out? If it’s going out, the amount on this line is
negative; if cash is coming in, the amount is positive.
2. Next, decide where the balancing side of the entry
should go. Wherever it goes, the entry should have
the opposite sign (plus/minus) from the cash portion
of the entry.
3. Finally, check that your grid is still in balance:
• If all entries are in the same column, that column
should total ZERO
• If there are entries in both columns, each column
should have an equal total
Take notes:
Lesson 1:
Introduction to
Lesson 3: Working with receipts
Time to complete:
38 minutes
bookkeeping
Lesson 2:
Entering
transactions
Lesson 3:
Work through the following sections, making any notes
that will help you later.
•
Working with receipts
•
Sales vs. receipts
Working
Key takeaways:
with receipts
•
Receipts, or money coming into the business, are one of
the two main types of transactions. These transactions
are also known as revenue or income
•
Most sales involve two accounting steps: the promise of
money for a product or service (sale), and receipt of the
amount due (payment)
•
There are two ways to handle this discrepancy. Cashbasis accounting doesn’t record a sale until payment has
been made, while accrual-basis accounting tracks the
promise and payment separately
•
Cash-basis accounting is simpler and more intuitive, but
the accrual method is more accurate because it tracks
both the promise and agreement. This is the method
most businesses use, and it’s the only method that
makes sense for businesses that deal with inventory
•
Promises of payment that have yet to be received are
called accounts receivable (A/R). These are assets for
the business
Lesson 4:
Working with
disbursements
Lesson 5:
Using financial
statements to
answer common
client questions
Take notes:
Lesson 1:
Introduction to
Lesson 4: Working with disbursements
Time to complete:
40 minutes
bookkeeping
Lesson 2:
Entering
transactions
Lesson 3:
Work through the following sections, making any notes
that will help you later.
•
Working with disbursements
•
Recording disbursements
Working
Key takeaways:
with receipts
•
The other main type of transactions are disbursements,
or payments from the business
•
Most disbursements are made on account and
follow the same logic as receipts. However, they are
called accounts payable because the business has
an obligation or promise to pay a vendor. These are
liabilities for the business
•
However, some disbursements are made by petty cash,
where the owner or an authorized employee pays for a
purchase in one step
•
There are many ways to classify or account for
disbursements, depending on these factors:
Lesson 4:
Working with
disbursements
Lesson 5:
Using financial
statements to
answer common
client questions
⚪ Does the purchased item get consumed
in the current month?
⚪ Is it a deposit or advance payment for future
goods or services?
⚪ Does it add tangible value for more than a year?
Does it add intangible value?
⚪ Is the item purchased for eventual sale to customers,
either directly or as part of a manufacturing process?
•
The matching principle of accounting requires you to
associate revenues with the costs required to generate
them in each period
•
The invoice date is generally considered the date
that a transaction occurred and is the correct date
for coding under GAAP (Generally Accepted
Accounting Principles)
Take notes:
Lesson 1:
Introduction to
bookkeeping
Lesson 5: Using financial statements
to answer common client questions
Time to complete:
25 minutes
Lesson 2:
Entering
transactions
Lesson 3:
Working
Work through the following sections, making any notes
that will help you later.
•
Financial statements
•
Understanding financial statements
with receipts
Key takeaways:
Lesson 4:
Working with
•
Financial statements tell you the health of the business
and ultimately, its story.
•
Every business needs three financial statements:
disbursements
Lesson 5:
1. The income statement tells whether the business
is turning a profit. In simple terms, is its revenue
greater than expenses?
Using financial
statements to
answer common
2. The balance sheet shows whether the business is
earning a return on its investments. What happens
when you combine the company’s assets, liabilities,
and accumulated earnings? The balance sheet
shows the long-term value of the business, also
known as its net worth
client questions
3. The cash flow statement indicates how much cash
the business has on hand
•
Accounts on the balance sheet are listed from most
to least liquid, on both the asset and liability sides
•
Business owners’ most common question is why
they don’t have cash on hand even though they’re
making a profit. This makes the cash flow statement
valuable because it shows that profit doesn’t
necessarily mean cash
Take notes:
Part 2: Bookkeeping Practice Management
Lesson 1:
Working
with external
Part 2 focuses on how your work overlaps with others.
You’ll learn about working with your clients and the many
professionals that bookkeepers partner with, including banks,
investors, employees, vendors, government, lawyers, and auditors.
You’ll also understand the bookkeeper’s responsibility for
documentation and what you need from partners.
partners (CPS,
Time to complete:
20 minutes
attorneys,
bankers, etc.)
Key takeaways:
Lesson 2:
The importance
of accurate
Ready to start Part 2?
documentation
Lesson 1: Working with external partners
(CPS, attorneys, bankers, etc.)
Lesson 3:
Lesson 2: The importance of accurate documentation
Lesson 1: Working with external
partners (CPS, attorneys, bankers, etc.)
Best practices
for working
•
Remember that your role is like a steward’s: someone
who manages or looks after another’s property
•
You should have a backup for every transaction
and each balance on the balance sheet
•
Request templates from each client’s accountant
showing how they wish to see information presented.
Start capturing that information at the beginning of the
year to avoid a year-end rush to gather everything
with clients
Lesson 3: Best practices for working with clients
Take notes
Lesson 1:
Working with
external partners
Lesson 2: The importance of
accurate documentation
(CPS, attorneys,
bankers, etc.)
Time to complete:
15 minutes
Lesson 2:
Key takeaways:
The importance
of accurate
•
documentation
o
o
o
o
o
Lesson 3:
Best practices
for working
with clients
As a bookkeeper, you are responsible for retaining
all source documents, which include:
Purchase invoices
Purchase orders
Delivery receipts
Receipts from meal expenses
Any calculations that go into a journal entry
•
You need source documents to properly reconcile
or account for any differences between the supporting
documentation and the balance shown on the
financial statements
•
Don’t accept non-source documents (internal
emails, copies of checks, and so on) as substitutes
for source documents
Take notes:
Lesson 1:
Working with
external partners
Lesson 3: Best practices
for working with clients
(CPS, attorneys,
bankers, etc.)
Time to complete:
6 minutes
Lesson 2:
Key takeaways:
The importance
of accurate
•
Be as explicit and proactive as possible. Your main
goal is to ensure your client never has any surprises
regarding their finances
•
Create a running list of questions to ask the client when
you meet with them each month
•
Create a checklist to guide you in entering transactions
•
Do your best to provide all relevant details each time
you enter a transaction. Include your initials or create
unique journal entry numbers for the company’s
adjustments
•
Favor accuracy over speed. Remind your clients that
your job is to ensure all their financial transactions are
accurate and fully documented, so you need to take the
time to ensure you get everything right
•
Don’t be afraid to ask questions
•
Check with the company leaders on their desired cutoff
dates for paying invoices in any given month
•
Know when the company wants a purchase recorded
as an asset rather than an expense (the company’s fixed
asset capitalization policy)
•
Make sure you have insurance coverage for yourself
and your business
•
Your reputation will suffer by affiliation with someone
who is not ethical. If a client ever asks you to do
something that makes you uncomfortable, resign
immediately. You need to protect your reputation
documentation
Lesson 3:
Best practices
for working
with clients
Take notes:
Appendices:
1. Double-entry bookkeeping template
2. Glossary of terms
3. List of bookkeeper responsibilities
4. Organizing information for transaction entry
Appendices
Appendix 1:
Double entry
bookkeeping
template
1.
Double entry bookkeeping template
2.
Glossary of terms
3.
List of bookkeeper responsibilities
of terms
4.
Organizing information for transaction entry
Appendix 3:
Appendix 2:
Glossary
List of
bookkeeper
responsibilities
Appendix 4:
Organizing
information for
transaction entry
Appendix 1: Double entry
bookkeeping template
Appendix 1:
Double entry
bookkeeping
template
Appendix 2: Glossary of terms
Listed alphabetically
•
Appendix 2:
Glossary
•
Accounts payable (AP or A/P): A short-term debt and
a liability on a balance sheet where a business owes
money to its vendors/suppliers that have provided the
business with goods or services on credit
•
Accounts receivable (AR or A/R): The amount of money
due to a business in exchange for the goods and
services that the company has provided on credit to
customers. Listed as a current asset on a balance sheet
of terms
Appendix 3:
List of
bookkeeper
responsibilities
Appendix 4:
Organizing
information for
transaction entry
Accounting: The recording and summarizing of business
and financial transactions, then analyzing, verifying, and
reporting the results
•
Equity: The amount of money that an owner and/or shareholders has invested
in a business. It can also refer to the potential value of the business
•
Generally Accepted Accounting Principles (GAAP): A cluster of accounting
standards and common industry usage used primarily by businesses reporting
their financial results in the United States
•
Income statement: A financial statement that shows the company’s income
and expenditures
•
Invoice: A time-stamped document that records a transaction between a vendor
and a buyer. Typically, a business sends an invoice to a client after they deliver the
product or service. The invoice tells the buyer how much they owe the seller and sets
up payment terms for the transaction. It serves as an official request for payment
•
Journal: A record of transactions listed as they occur that shows the specific accounts
affected by the transaction
•
Journal entry: The foundation for all other financial reports. In double-entry
accounting, each journal entry should include at least two entries (one credit and
one debit) that must balance. Each journal entry should have a unique number and
include a date, account names and/or numbers, description, debit column, credit
column, and space for relevant notes
•
Liabilities: debts that the company owes others
•
Matching principle (of accounting): Principle that requires recognizing revenues and
the costs required to generate them in the same reporting period
•
Accrual basis: The recognition of revenue when it is
earned, not when the money is collected
•
Assets: Anything of value that has the potential to be
transformed into cash to create money for a business
•
Balance sheet: A financial statement that contains
details of a company’s assets or liabilities at a specific
point in time
•
Bookkeeper: Person who records financial transactions
for a business or other organization
•
Net worth: The amount by which the value of the assets exceeds the liabilities is the
net worth (equity) of the business
•
Bookkeeping: The recording of financial transactions for
a business or other organization
•
Payment: Settlement of the amount due in exchange for a good or service
•
Petty cash: A small amount of cash readily accessible for paying expenses too small
to merit writing a check or using a credit card
•
Purchase on account: An agreement to pay in the future for goods or a service
•
Purchase order: The contract that a buyer drafts to purchase goods from a seller,
including all relevant details such as items, prices, and delivery details
•
Receipt: Record that shows shows a seller has received money from a buyer
•
•
Cash basis: The recognition of revenues and expenses at
the time cash is received or paid out
Cash flow statement (or Statement of cash flows):
A financial statement that provides aggregate data
regarding all cash inflows a company receives from its
ongoing operations and external investment sources
•
Cash sale: A business transaction in which the buyer
pays for goods or services at the time of the purchase
•
Reconcile: To account for any differences between supporting documentation and
the balance shown on financial statements
•
Disbursement: A payment in cash during a specific
period that is recorded in the general ledger of
the business
•
Sale: Promise or agreement to pay for a good or service (one of the two steps for
a purchase on account)
•
Source document: Any item that documents a transaction, such as a receipt, bill,
invoice, statement, or check
•
Double-entry accounting: An accounting method where
each transaction is recorded in two or more accounts
using debits and credits
Appendix 1:
Double entry
bookkeeping
template
•
Trigger event list: The list of events to look out for that
may affect other items, these include:
⚪ An employee, warehouse, or delivery in a new state
⚪ Purchase of land
Appendix 2:
Glossary
of terms
Appendix 3:
⚪ New construction
⚪ New processes or experimentation
⚪ Ownership and leadership change
List of
⚪ Loans received or loans forgiven
bookkeeper
⚪ Insurance claims
responsibilities
⚪ Noncash benefits to employees
Appendix 4:
Organizing
information for
transaction entry
⚪ Acquisition of trademarks or patents
⚪ Sale or acquisition of a business
Appendix 1:
Double entry
bookkeeping
template
Appendix 3: List of
bookkeeper responsibilities
In your role as agent of the owner(s), you need to ensure:
•
The accuracy of information
•
The accuracy of payroll tax deposits
•
Loan covenants
•
Timely bank deposits
Appendix 3:
•
Effective cash management
List of
•
The confidentiality of information
•
The security of data and documents
Appendix 2:
Glossary
of terms
bookkeeper
responsibilities
Appendix 4:
Organizing
information for
In your role as carrier of personal liability, you assume
responsibility for:
•
The integrity of checks (as an authorized representative)
In your role providing details on assets, you provide documentation for:
•
Bank reconciliations
•
The Accounts Receivable Aging report and any uncollectible accounts
•
Related party receivables
•
Inventory on hand at year end, quantity, and cost
•
The fixed asset schedules
In your role providing details on liabilities, you provide documentation for:
•
New debt obligations (for example, copies of agreement and terms)
•
Loan statements with year-end balance
•
Credit card statements at year end
•
Copies of leases, purchase agreements, or equipment financing arrangements
made during the year
•
Copies of sales tax returns filed
•
Copies of payroll tax returns and Forms W-2 and W-3
⚪ [Insufficient funds to a payee]
transaction entry
⚪ Trust fund taxes (like payroll tax withheld)
•
Data breaches
•
Data backups and protection
•
Sufficient insurance coverage (for example, errors and
commissions, cybercrime)
In your role supporting the CPA with year-end
information, you provide documentation for:
•
The preparation of tax returns
•
Capital
•
Handling questions about compliance with reporting
(foreign banking and 1099s)
•
Request for info on any items identified as a potential
trigger event
In your role providing details on equities, you provide documentation for:
•
Any changes in ownership or capital accounts
•
Contributions and distributions by/to owners (this includes loans)
•
Prior year equity adjustments
In your role supporting the CPA with changes to the client’s permanent file, you
provide documentation for any of the following:
•
Original IRS notification of Employer Identification Number
•
Articles of Incorporation
•
Stock Certificate Data
•
Ownership Information: Names, Addresses, % of ownership, and EIN #
•
Closing statements for any real estate bought or sold
Double entry
In your role supporting the CPA, you provide notification
and documentation for any of the following “trigger events”:
bookkeeping
•
Change in accounting method
template
•
Change in inventory costing
•
Employee, warehouse, or deliveries made in a new state
•
Purchase of land
•
New construction
•
New processes or experimentation
Appendix 3:
•
Ownership and or leadership change
List of
•
Loans received or forgiven
•
Insurance claims
•
Noncash benefits to employees
•
Acquisition of trademarks or patents
Organizing
•
Sale or acquisition of a business
information for
•
Notice received from a taxing authority
transaction entry
•
Lawsuits filed
•
Injury on-site or involving an employee
on company business
Appendix 1:
Appendix 2:
Glossary
of terms
bookkeeper
responsibilities
Appendix 4:
Appendix 4: Organizing
information for transaction entry
Transaction Entry - Organizing Information
Income Stmt
Balance Sheet
Stmt of Cash Flow
Trial Balance = Sum of Zero
General Ledger
Sales Ledger (A/R)
Bank Register
Journals - transaction entry
Chart of Accounts
Purchases Ledger (A/P)