Bookkeeping in Orlando has evolved a lot since the advent of computers and accounting software, cutting down on the amount of “manual input” required by the Orlando bookkeeper. For instance, preparation of a sales invoice is automatically updated to the relevant general ledger accounts. This also updates a customer’s detailed information as well as store information on financial statements, along with other reports.
The very premise behind this accounting software is to ensure every transaction has debit amounts that equal to credit amounts. This electronic method of posting is point-on accurate and completely eliminates errors as opposed to the manual method, where amounts had to be rewritten and calculated. As one can imagine, the debits always coincide with the credits and the trial balance is always “in balance”. Gone are the long hours spent looking for errors.
Doing bookkeeping in Orlando for more than 16 years, we know that there is one downside however. Even though the accounting software is very fast and accurate, there is always the likelihood of some transactions being omitted, entered twice or whether incorrect amounts were posted; the software doesn’t have the ability to detect this. Unfortunately, this may lead to fraudulent transactions and even incorrect amounts could be entered if an Orlando accounting firm fails to have certain “internal controls” in place.
After certain transactions have been processed for each accounting term, such as sales invoice, vendor invoices and payroll, certain adjusting entries are needed. They are:
- Revenues and assets earned, not entered into the software
- Expenses and liabilities incurred; not recorded in the software
- Prepayments no longer prepaid
- Recording certain depreciation and bad debt expenses
An accountant in Orlando is still required though, to make adjusting entries and determine the amounts and respective accounts. Unless these adjusting entries are made, the accounting software is going to display incomplete, inaccurate and at times, even misleading financial statements.
The next step in this bookkeeping in Orlando process is that once the financial statements for the year are released, is for the software to transfer balances from the income statement accounts to the proprietor’s capital accounts, as before also known as the stockholders’ withheld earnings account. As a result, the following year’s income statement accounts reset to a zero balance. Note: the balance sheet accounts remain open since their balances are carried forward to the next accounting term or year.
From what we’ve discussed so far, we understand that Orlando bookkeeping and generally accounting, involves recording of an accounting firm’s financial transactions. These transactions are identified, approved as well as sorted and stored in a way so that they can be retrieved and presented at any time, in an accounting firm’s financial statements and other reports. A few examples of financial transactions include:
- Purchase of supplies with cash
- Purchase of merchandise on credit
- Sale of merchandise on credit; and so on and so forth
In Orlando bookkeeping, the transactions are sorted into hundreds of accounts such as Cash, Accounts Receivable, Accounts Payable, Loans Payable, Rent Expense etc. The amounts in these respective accounts are reported in the accounting firm’s financial statements, either in detailed form or a summary.
Once an Orlando accountant gets his head around the accounting software, there is no doubt far greater efficiency and information available, with just a few clicks, for conducting business.
The Role Bookkeeping Plays in Orlando Accounting Firms
The term bookkeeping may infer slightly different meanings depending on how you look at it. Some folks tend to think bookkeeping is the same as accounting; it’s assumed that simply keeping an accounting firm’s books and preparing the financial statements and tax reports is related to bookkeeping. Orlando accountants usually choose not to share their perspective.
Some see bookkeeping in Orlando as restricted to recording transactions in journals and then posting the figures into accounting ledgers. And after the figures have been posted, the Orlando bookkeeping aspect has ended and a certified accountant handles affairs from thereon. This Orlando accountant then makes adjusting entries and prepares the financial statements.
With the use of computers and accounting software being widespread, an accountant with little Orlando bookkeeping experience can use accounting software for recording vendor invoices and preparing sales invoices. The software updates the accounts in the general ledger automatically. After establishing the format of the financial statements, generating them is just a click away. At mid-sized and larger accounting firms in Orlando, the term bookkeeping may not even be used; usually accounting clerks supervised by another accountant or two, get the job done.
This explanation of Orlando bookkeeping takes a stab at providing an understanding the relationship bookkeeping shares with accounting. The general goal here is to increase your knowledge and confidence in bookkeeping, accounting and business.
Prior to the way computers got integrated into our daily lives, bookkeeping Orlando started when small businesses wanted to write entries into journals; the books of original entry. Since the amount of writing in a general journal needed to be cut down, special journals, also known as daybooks, were introduced. These comprised a sales journal, purchases journal, cash receipts journal, and cash payments journal respectively.
An Orlando accounting firm or business would write transactions in these journals, in date order. These amounts would be posted to the respective accounts, found in the general ledger. Examples include Sales, Rent Expense, Wages Expense and so on. Balance has to be calculated for each account, which in turn, is used in the financial statements. Doing all this manually would at times lead to incorrect amounts. To avoid just that, the bookkeeper prepares a trial balance.
After locating errors and correcting them, the bookkeeping in Orlando process is concluded and the accounting phase begins. At this stage, adjusting entries may need to be made, as discussed earlier. Adjusting entries are needed as:
- Additional revenues may have been earned but not recorded
- Additional expenses and liabilities may have been incurred but not recorded
- Amounts recorded by the Orlando bookkeeper may have been prepayments that are no longer prepaid
- Depreciation, including other non-routine adjustments that need to be computed and recorded
After completing the annual financial statements, closing entries are made. The premise here is to get the balance for income statement accounts equal to zero, before each accounting year starts.
This ultimately gets transferred to the proprietor’s capital account, also known as the stockholder’s withheld earnings account.
Check back soon to read up on how modern-day bookkeeping in Orlando methods are changing the way Orlando accounting firms do business.
If you need more information about our, Orlando accounting and tax services, please contact us at 407-344-1012. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.