Your Firm’s Chart Of Accounts Can Be A Great Financial Tool
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A Healthy Serving of Beans
Your Firm’s Chart Of Accounts Can Be A Great Financial Tool
Bean There, Done That
Monthly Bookkeeping Wisdom From Your Friendly Bean-Counter
“So, I’m confused,” I said to one of my treasured new clients. “What’s this expense category I see labeled BUTT?”
My new client, Millie, had been doing her own bookkeeping, and she’d set up her own “chart of accounts” for various categories of revenue and expenditures. She was asking me now to take over her bookkeeping and review her work.
“Well,” Millie said, “I wasn’t sure about that. It’s an abbreviation for ‘buttons.’ I had to buy some to replace the ones that popped off my jacket.”
“I see,” I said. “And this one? BARF?”
“Oh, goodness,” Millie said. “That’s supposed to be under revenue. It’s short for ‘Bar Funds.’ Darn it. You can see why I need your help.”
And I could.
Happily, I was able to take a fresh look at Millie’s chart of accounts, and reorganize it to better fit her thriving restaurant business.
I took some time with Millie, and at the end of our meeting, she understood that her chart of accounts was an important foundation for organizing her business’s financial information in a way that would enable her to clearly see how money moved in and out of her business.
A company’s chart of accounts also serves as the basis for financial reports that enable a business owner to make crafty financial decisions that drive the future of the firm. That chart of accounts is a crucial starting point for all the firm’s key financial reports.
How healthy is your business? If you have clear financial reports, driven by a strong chart of accounts, you’ll know.
If you don’t, you won’t.
Luckily, Millie’s business was doing well, and after we reorganized her chart of accounts, we were able to clearly show her firm’s progress using her company’s financial reports.
If you’re starting a business, or if you’re not sure about your existing business’s chart of accounts, reach out to your Friendly Bean Counter (FBC). We’ll make sure your bookkeeping is set up in a way that helps you make smart business decisions going forward.
You’ll be glad you did!
Discussion Questions
- 1Does your business have revenue or expense categories labeled “BUTT” or “BARF?”
- 2Create a pie or bar chart which illustrates the percentage of your business which depends on BUTT or BARF, or any other colorfully-labeled category.
- 3How can your FBC (that’s me) help you create a more useful chart of accounts?
Don’t forget: at DK/RK Services, you’re always “more than a number.” We WANT to take care of your bookkeeping, professionally and personably, so you can focus on running and growing a great business enterprise! Please check out our many enthusiastic FIVE STAR online reviews (Yelp, Google, Facebook, you name it). We look forward to earning our next great review from YOU.
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