DAY 1 of 30 Day Reset for New Bookkeepers: Setting Up the Foundation

Welcome, bookkeepers, to day 1 of our 30 day reset journey! I’m thrilled you’re here, taking this big step to refine and elevate your skills. As the saying goes, a sturdy foundation cannot be built on sand. So today, we start laying that bedrock.

We’ll be reviewing some core terminology, revisiting foundational accounting guidelines, and ensuring everyone has strong command of basic practices like double entry booking. Consider this your opportunity to shore up any holes in your fundamental knowledge. Don’t be afraid if some parts feel remedial – even seasoned pros need brush up sometimes! Think of it as whetting your knife before the real work begins.

Let’s start by clarifying some key accounting terms:

• Assets – Tangible or intangible things the business owns that hold value (e.g. cash, inventory, branding)
• Liabilities – Debts or obligations owed by the business (e.g. loans, mortgages, accounts payable)
• Equity – The residual claim on assets after debts are paid (e.g. owner investments, retained earnings)
• Contra Account – An account paired against another account to reduce its balance (e.g. contra revenue, contra asset)

Next, let’s discuss the universally accepted accounting guidelines known as GAAP – Generally Accepted Accounting Principles. GAAP aims to establish standard industry-wide accounting policies and procedures for consistency.

Key GAAP principles include:

• Revenue Recognition Principle – Revenues recognized when earned, not when cash is received.
• Matching Principle – Match expenses to associated revenues in the same reporting period.
• Original Cost Principle – Assets are recorded at original purchase price unless impaired.

Now, what’s possibly the most essential foundation skill? Double entry booking. This is the practice of entering transactions as both debits and offsetting credits to balance the books.

Let’s review when debits vs. credits apply:

Debits increase asset and expense accounts Credits increase liability, equity, and revenue accounts

If this rule ever starts slipping, repeat the mnemonic “DEAD CLER” – Debits Expenses Assets Dividends / Credits Liabilities Equity Revenues.

Let’s run through a quick example:

If a client purchases $500 in inventory with cash, you would book: Debit Inventory $500 Credit Cash $500

Balanced books lead to accurate reporting. So cement your grasp of double entry early on.

Of course, we can’t forget the Chart of Accounts – the master list organizing all tracked accounts. Setting this up properly is crucial. Here are some key steps for tailoring to each client:

• Discuss business processes and reporting needs
• Add accounts as dictated by operations
• Separate recurring expenses like utilities
• Ensure payroll accounts are present if relevant

It’s also vital to customize software settings to the client instead of forcing them into generic templates. The software adapts to their organization, not vice versa!

Whew, that was a solid first day reinforcing key foundations – terminology definitions, central GAAP guidelines, double entry booking, customizing the CoA! Pat yourself on the back. Rome wasn’t built in a day, but look at the strong cornerstones we’ve laid together on day 1!

As we wrap up day 1 shoring up these accounting fundamentals, I also want to give you a preview of exciting offerings to accompany our 60 day reset program:

Upcoming Free and Paid Seminars – Throughout our journey together, we will be hosting a mix of complimentary and paid seminars featuring guest speakers who are experts in areas like marketing, branding, law, and other topics relevant to growing your skills as a bookkeeper. Keep an eye out for these enriching events that will add even more value to our 60 day experience!

I hope you feel empowered by the strong base we’ve established on day 1. Please let me know if you have any other questions! Until tomorrow, enjoy the rest of your day and come back ready to dive into the details!