The art of knowing the details about where the money moves in a business is actually accounting because this art would help owners monitor the movement of the money in his enterprise. Now small enterprise owners would have to do the accounting cycle all by themselves because usually, the smaller enterprises would not need to hire an accountant. So if one is an owner of this type of enterprise, here are some things to know about small business accounting and bookkeeping.

Now the process of monitoring the money an in enterprise is known as creating the accounting cycle and begins with the process of journalizing. Now in a nutshell, journalizing is the process of recording all the activities in one notebook for the purpose of organizing them later on. The journal entries would consist of two things namely the account titles and the respective amounts.

Now if the journal contains all the raw information, then the ledger would contain all the organized information. The purpose of the ledger is to make sure that all the account titles are organized and all the amounts are collected together under one account title. This way, one will be able to know all the monthly activities.

Now once all the information has been compiled in the ledger, then he will be putting the information in the trial balance. Now the trial balance is the step to take before creating the balance sheet. Now basically, one will already be tallying all the numbers so that the mistakes in the balance sheet will be lesser.

Now once that is already done, then one will be creating the balance sheet in a ten column worksheet. Now if one is not sure how to make one, he may search the net. However, one thing he should know is that the financial statement would contain the total assets, liabilities, and equity and that the assets have to be the same as the liabilities and equity combined.

Now after making the balance sheet, then the very next step would be creating the income statement. In the income statement, one will be listing all the income and the expenses. From there, he will subtract the expenses to the income in order to produce a net gain or loss. If the income is bigger than the expense, it is a gain but if it is the other way around, it is a loss.

Now the very last step to take in the cycle would be to create a statement of equity which would look at the capital accounts. These capital accounts are the beginning capital, the investments made by the owner, the withdrawals, and the ending capital. Now basically, he will be subtracting the withdrawal and adding the additional investments to produce the ending capital.

So as one can see, there are a lot of things to think abut when handling a small enterprise. Taking care of the accounting cycle is one of the most crucial things that one would have to do. By following the cycle properly, one will be able to know whether the flow of money of the business is good or not.

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