health care consulting

Accounting 101 Lessons For Beginners And Experts

By Lisa Washington 10 April, 2023 3 mins read

Even those who don't have any prior accounting knowledge, accounting 101 lessons can prove to be very useful. This course can also be used as a refresher for people who already have some accounting knowledge. It will cover topics like net worth, receivables, and double entry accounting. Once you've mastered these concepts, you can apply them to your own business.

Accounting for double entries

Double-entry accounting is a basic method of recording business transactions. It involves adjusting balances in a certain way to reflect the value of accounts and to maintain an equal balance between assets or liabilities. It employs the concept of an account that is both an asset as well as a liability account. The asset represents cash earned and the liability represents the amount owed.

This method is also more precise, which is important for small business that needs to apply for loans as well as for financial institutions that want accurate records. This helps to track the company's growth, since every business transaction must also be recorded in two accounts. Each account must contain debits and credit equal to the total assets and liabilities plus equity.

Receivables

Accounts receivable refers to the money a business owes to customers. It involves the process of invoicing customers and pursuing and processing payment. For example, a furniture maker might deliver furniture at a retail location and record the payment due under accounts receivable. The furniture manufacturer waits for payment from the retailer.

Make sure you clearly display your payment terms on your invoices so that your customers can make timely payments. If customers don’t know when they have to pay, they won’t make the payments. You can also use accounts receivable reports to remind customers when their accounts are past due.

Net worth

The company's net worth is the measure of its assets and liabilities. Assets include cash, property, inventory, machinery and buildings, and loans made to other people. Liabilities are all of the company’s debt obligations. These two items must be present in order to calculate net wealth.

A positive networth is a sign that a company has a sound financial position. A negative networth is an indicator that a company's financial health is in good shape. A person's financial health can be affected if their net worth drops. For instance, imagine that a newlywed couple has a $300,000 house, a $50,000 portfolio of investments, and a $10,000 car loan. The net worth of the couple is positive while their liabilities remain negative.

Accounting basics

Regardless of the type of business you run, you must understand some of the basic accounting concepts. These concepts are essential to create accurate financial statements. Recognizing revenues and expenses at the time they occur is one of the first things you should understand. Contrary to cash-based accounting that recognizes money as it is received, accrual accounting tracks transactions as they occur.

These accounting principles simplify financial statements. If you use one currency for purchases or transactions, you'll understand your financial statements better. For example, if your business is based in the U.S., it would be a good idea to report its transactions in the U.S. dollar. Similar to the Japanese Yen, you would convert your transactions into U.S. dollar if you are based there.

Benefits of learning accounting basics

Learning accounting basics is a great way to get a better understanding of how the business world works. It will allow you to make better financial choices and help you negotiate better deals. It will also help you make better financial decisions by understanding how to interpret financial statements.

Doing your research is the best way you can learn accounting. You can find assignments in textbooks, study guides, or from your teacher in class. It can be tedious to study so make sure you know how to maximize your time. It is a great way to study: Buy textbooks and then read them carefully.

FAQ

Do I need to pay tax on consulting income?

Yes, tax will be payable on any consultancy profits. The amount you earn depends on your annual income.

If you are self-employed, expenses can be claimed on top of your salary. These expenses include rent, childcare and food.

You can't deduct the interest on loans, vehicle damage, or equipment costs.

Only 25% of your expenses can be claimed back if you make less than PS10,000 annually.

Even if you earn more than the threshold, you could still be taxed depending upon whether you are classified as a contractor and/or employee.

The PAYE tax for employees and the VAT tax for contractors is generally paid as you earn.

Is it possible to be a consultant?

A consultant is someone that helps you achieve your goal. They can offer advice on how to do it better, faster and cheaper.

Consultants can help you resolve problems, make decisions, and negotiate with other people.

Consultants can be hired to assist with specific tasks or projects.

Actually, most consultants get paid hourly and daily rates, rather than per-project.

Are you a qualified consultant?

You can become an expert in any subject by learning the subject thoroughly, then applying what you have learned.

Start studying today if you want the skills to be a great manager!

It may be difficult to get hired if your degree is not accompanied by relevant work experience. You could still apply if you are able to show that you have the same subject knowledge as the people who were hired.

Employers are always looking for people with real-world knowledge.

How long does it usually take to become an expert consultant?

It depends on the industry and your background. People start work with a few weeks before they find employment.

However, many consultants spend years honing their skills prior to finding work.

Statistics

Over 50% of consultants get their first consulting client through a referral from their network. (consultingsuccess.com)
"From there, I told them my rates were going up 25%, this is the new hourly rate, and every single one of them said 'done, fine.' (nerdwallet.com)
WHY choose me: Why your ideal client should choose you (ex: 10 years of experience and 6-week program has helped over 20 clients boost their sales by an average of 33% in 6 months). (consultingsuccess.com)
On average, your program increases the sales team's performance by 33%. (consultingsuccess.com)
My 10 years of experience and 6-step program have helped over 20 clients boost their sales by an average of 33% in 6 months. (consultingsuccess.com)