Financial Series Part II Recap: Bookkeeping 101

On Wednesday, February 24, the American Booksellers Association presented an education session dedicated to bookkeeping, hosted by ABA CFO PK Sindwani, Accounting Manager Jennifer Almodovar, Accounting Coordinator Ana Gonzalez, and Billing and Collection Coordinator Annemarie Majeau.

This session was part two in a three-part financial planning series for bookstores. Booksellers can sign up here for part three, which will be focused on managerial accounting and take place on March 4 at 3:00 p.m. ET. 

Booksellers can view a recording of the session and access handouts on the Education Resources page on BookWeb.org.

Here are some of the key points from the session:

• Bookkeeping is the process of recording every financial transaction, which is later used in accounting when generating financial statements. Common bookkeeping transactions include recording payments from customers, sending invoices and recording payments when received, entering bills from suppliers, and more.
• Bookkeepers should have a chart of accounts, which will help to organize all transactions that are being processed; accounting software will often guide users through creating this.
• The five categories of accounts are assets, which includes everything a business currently owns; liabilities, which includes debt obligations, what a business owes, what a business is owed, and what will be owed in the future; owner’s equity, which includes one’s investment in the business; revenue, which tracks a business’ primary source of income; and expense, which includes office and travel expenses, compensation costs, bank fees, programming costs, consulting fees, and legal/accounting fees.
• There are two different accounting methods: cash and accrual accounting. Cash accounting records revenues and expenses at the time the cash is actually received and paid out, while accrual accounting records both revenues and expenses at the time of the sale.
• Some other bookkeeping terms to keep in mind include:
  • General ledger: a record of all transactions that take place during the life of a company.
  • Trial balance: shows account balances within a specified period of time, where the total debits equal the total credits recorded.
  • Journal entry: used to record financial transactions by assigning a debit and credit value to an account within the chart of accounts. See Sindwani walk through a sample journal entry at 20:00.

The session concluded with an extensive Q&A session with questions specific to individual stores.