Introduction to Accountancy

Introduction

Accounting is the systematic recording of financial facts. You can do this on the back of a cigar box, keep all receipts and invoices in a box or write down all income and expenses on a piece of paper. There are many possibilities for doing this.

Then you can then give this information to an accountant who processes it in a system. This results in faster results and search options in your figures. You can group and see results.

However, to gain insight into your financial situation at any time of the year, you can use the e-Captain member management program to keep track of your financial situation and provide this information to your accountant.

The benefits this offers include:

•     you keep track of what the incoming and outgoing money flow is
•     you can see how profit or loss has worked
•     you retain control over what the expenses and income are making for the short and long term
•     you save on costs for your accountant
•     you can see the results daily, weekly, monthly
•     you can work with several people in e-Captain at the same time

With e-Captain you can even allow your accountant to look and work in your administration remotely.

Accountancy in e-Captain

e-Captain has a fully integrated accounting system. You can get started with this but it is not a necessity. The Accounting module is part of the 8 standard e-Captain modules.

If you want to work with the accounting module you will have to make a number of settings and activate the accounting module. After you have done that, the accounting module is free to use for one company, association or foundation.

In e-Captain we work according to the principle of double accounting. e-Captain has the following characteristics as administration:

•      Debtors
•      creditors
•      Ledger accounts
•      Journals

Debtors

A debtor is a customer who still has to pay. In accounting a person or company that has to pay for delivering goods or a service. In a large company, debtors are dealt with in a special section of the financial administration, the so-called debtor administration that often corresponds to the customer administration. The creditors stand opposite the debtors.

Creditors

A creditor is a supplier that has to be paid. In accounting a person or company to whom payment must be made for the delivery of goods or a service. Often the term is used to indicate people who have not yet been paid, but in principle the paid suppliers are also creditors. The debtors are standing in front of the creditors.

General ledger

A general ledger account is a collection of identical expenses or income, items that are brought together on a schedule. Each type gets an account number (not to be confused with a bankaccount number). This provides insight into the groups of finances that work in a company, association or foundation.

Each list that is created is given a unique number. All these lists together are called the general ledger scheme. For example, there will be many bills for, among other things, purchasing and sales.

Journal: In accounting, a journal is a collection of registered items, which are processed from time to time in the general ledger. In a diary (as the word indicates) is worked daily. Amounts can be registered and processed on a daily basis. From time to time (for example, weekly or monthly) the recorded amounts are processed to the general ledger accounts. If that is the case, the diaries are empty again for new registrations.

Dual accounting

By dual accounting we mean the usual accounting system with double entries. Each transaction is entered both in a diary and in a general ledger account. In the accounts, the amounts, by means of a diary, are recorded on both the creditors' side and the debtors side. (diary and ledger)

The classic representation of such a booking or journal entry is

Profit and loss report

A profit and loss account or profit and loss account is, in addition to the balance sheet and, if present, the cash flow statement, part of an annual account (and therefore part of an annual report), and gives an overview of an entity's revenues and expenses over an certain period, usually a year. This overview ends with the profit (or loss) achieved over that period.

Determining results

Almost every legal entity will create and publish a profit and loss account. In any case, every company, whether that is a legal entity or a natural person, will draw up a profit and loss statement.

In practice, the determination of the result is a rather complicated matter. This is mainly due to the allocation of costs to several financial years. The profit and loss account of an Instructor (to take an example with small amounts) could, in its simplest form, look like this:

Let's assume then that this Instructor does not write his handouts with a pen, but with a PC. It will last a year or three. If that PC has cost € 1800, he must allocate € 600 every year. That is known as "depreciating". The fact that he spent € 1,800 in the first year is only important for the determination of the "starting value" in the profit and loss account.

His profit and loss account then becomes as follows:

On his balance sheet he will also mention the presence of that PC and the depreciation. At the time of commissioning, he will assign a value of € 1800, and each month this will be reduced by € 50. The value is nil after 36 months. (this is only one of the ways of depreciation).

The balance sheet

A balance sheet is an overview of the assets and liabilities of (usually) a legal entity at a given time. In other words: on a balance sheet you have what you have (assets), in the form of money, goods, etc., and how they are financed (liabilities): with equity capital or with debt (loans). Based on a balance sheet, an indication can be obtained about the assets of that entity as of a certain date (the balance sheet date, usually this is 1 January, although large companies often also publish balance sheets at a quarterly end). The difference between the assets and the debts is equity. The term "balance sheet" refers to the balance between the assets on the one hand and debts plus equity on the other.