From the course: Excel for Accountants

Small business accounting overview - Microsoft Excel Tutorial

From the course: Excel for Accountants

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Small business accounting overview

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- [Instructor] While P&L statements and cash budgets are important for many accountants, especially at smaller firms, a lot of the daily work really comes in simply keeping track of and categorizing revenue and expense items. Excel can help with that, as we're about to see. I'm in the 02_01_Begin Excel exercise file. Now, what we have here is a very basic general ledger that we've set up in Excel, and this is for a small company, ABC. And as you see, we've got a significant number of expenses and income items, and we've put these under separate sheets. We certainly could keep these in the same area. For whatever reason, this particular firm, we've decided to separate these out, and there's a lot of reasons why we might do that. But you know, in our case, we've simply separated out the expense items on our first tab and all of our income items on the second tab. Now, what we might be interested in doing from the point of view of kind of replicating the basic tasks that an accountant does on a daily basis, maybe we need to go through and enter certain items. How do we do that? Well, it's pretty straightforward. Let's pretend as an example we have a new expense that comes in, say, on December 31st at the end of the year 2017, and maybe this is, say, end-of-year tax payment. We might have as an example an $1,800 tax payment for the end of the year. This is, again, for ABC Company, and perhaps this is a payment made, say, using our ACH withdrawal, all right? And we might categorize this as tax payment. All we've done now is go through and add a single line item into our GL expenses. Now, of course, there's a whole bunch of features that we'd probably like to have in here but don't because we have a smaller business. We don't have any sort of GL codes, for example, or any sort of sign-off for expenses, so there's a lot of controls that are missing. But from a basic small business point of view, this is a great way to go through and keep track of our expenses and our income that comes in. So maybe, again, in addition to our single expense on December 31st, 2017, we also have an income item that comes in. Maybe we have a, let's say, a deposit from Heartland, the credit card company for the firm. And maybe for this particular day it's $2,000. And again, it's for the ABC Company, and this might be an ACH deposit. The nice thing about Excel is that it autofills many of the basic features that we're going to need to fill in, so it makes a little quicker to enter these. In addition, it's very easy to scroll through and look at what our past expenses were, go through and compute, as an example, the income for a particular month, et cetera. So Excel really gives us an easy way to visualize different things that we care about. For example, we could easily determine that during the month of December 2017, ABC Company brought in $94,324.40. Now you should have a basic handle on how we go through and add income and expense items to a basic ledger, as we have here. This is a good start towards simplifying many of the tasks that a typical accountant handles.

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