Monthly Archives: May 2010

Tip for Advance SA Users –How to Track the Buying & Selling of Stocks in Simply Accounting

  • Set up each security as an inventory item. Linking the Asset & COGS account to the appropriate GL account. (investments & gain/loss accounts)
  • Set up the brokerage firm as a Vendor.
  • Post a purchase invoice under the brokerage vendor to buy shares putting the total cost in the amount column with the number of shares purchased in the quantity column. Simply will back calculate “cost per share”.
  • Set up the brokerage firm as a Customer.
  • Post a sales invoice under the brokerage customer to sell shares putting the net proceeds in the amount column and the quantity sold in the quantity column. Difference between Sales and COGS (Cost of Goods Sold) on the Income Statement is the overall Capital Gain/Loss.

To move amounts between vendor and customer accounts for the broker use Payments /Receipts modules through a clearing account.

Dianne Mueller,CPB

Soma Small Business Solutions

Gold Level Certified Simply Accounting Consultant

Why Entrepreneurs Do Bookkeeping?

Why do you bother to do accounting in your small business? So that you can do your tax return at the end of the year? So that your accountant can prepare a nice set of financial statements for you to give to your banker? While both of those are important, I hope that they are not the primary reason you do your accounting.
In my opinion, the most important reason to do your accounting (and to do it on a regular basis) is because it provides you (the business owner) with information that is essential in helping you make business decision. If your accounting system isn’t doing that for you, then it is time you made a change.
I have a client for which we have just finished revamping the accounting system. This client is in the construction industry and the accounting system was unable to tell the owner which jobs were making him money and which were not. He could not even tell which types of work were most profitable. Worst of all, he thought that his general and administrative expense was eating up whatever was left over after paying all of his direct costs. 
The client was already using a good accounting software program (a great start). We created a whole new set of accounts which more accurately described the client’s sources of revenue and expenses. We grouped the expenses so that management could clearly see which costs were directly related to construction work and which were general and administrative. We also set it up so that we could look at the revenue and direct expenses from each individual job and from each type of work.
As the client begins a new fiscal year with a new accounting system, the owner is really excited about being able to use his accounting information to control his business in ways that were never before possible. You could start your next year with the same feeling.

Thanks for the content of this article to Jeff MacFarlane, C.A.

A virtual office and portal for corporate tax preparation services for professional bookkeepers.

Dianne Mueller,CPB

Soma Small Business Solutions



Soma Presents -My First Year in Business – A Financial Overview Seminar Thursday May 13th @ SBBC

Bookkeeping done right! Talk to a professional

Small Business BC, 390 – 601 W Cordova St, Vancouver
May 13, 2010    
  • Speaker  Dianne Mueller
  • Start Time  10:00 am PST   End Time  12:00 pm PST  
  • Price  $ 59.00
  • Description

    Attend the My First Year in Business – A Financial Overview Seminar (May 13, 2010 from 10-12 pm) and compliment your learning with a one on one 30 minute consultation with a professional bookkeeper from Soma Small Business Solutions. Your 30 minute consultation appointment allows you to ask the specific bookkeeping questions you have for your individual business situation. The 30 minute sessions are booked in advance and take place at Small Business BC.  Appointments are booked on a first come, first serve basis, and are available during the following times:  May 18th, 2010 at 9:00am, 9:30am, 10:00am, 10:30am, 11:00am, or 11:30am.

    Register for this package online and we will contact you directly to book your consultation appointment.  Or call 604-775-5541 for further information. Package price $59 plus GST.

Small Business owners don’t think like accountants or bookkeepers; they are cash flow thinkers.

When discussing profits you are not talking about cash flow. These are apples and oranges, very different concepts.

To illustrate the difference between cash flow and profit:

Suppose a business records $40,000.00 in sales and $29,000.00 in expenses for the year. The income statement for this company would show a 11,000.00 profit for the year. (40,000.00 -29,000.00)

Scenario #1: The business invoices but does not collect a dime of its 40,000 in sales; it gives credit terms to its customers, of an extended period of time, and none of its customers make any payments by the end of the year. The business however paid all its suppliers for the 29,000.00 of expenses during the year. The “cash in” to the business is zero and “cash out” equals $29,000. The cash flow is a negative $29,000.00 for the year despite a profit of $11,000.00!

Scenario #2: The business collected all its 40,000.00 in sales during the year; however, it didn’t pay any of it suppliers the 29,000.00 in expenses. The “cash in” is $40,000 and “cash out” equals zero; cash flow is a positive $40,000,000 despite a profit of only $11,000.00!

You would not find such extreme examples in the real world of business; however the examples highlight the difference between cash flow and profit. Cash flow depends on when sales revenue is collected and when expenses are paid not when the sale or expense takes place.

It’s possible for a business to report a profit on its income statement, and yet realize a negative cash flow in the bank, struggling to meet its financial obligations.

It is also possible for a business to be losing money on its income statement, but have funds in the bank to pay its financial obligations.

Although profit cannot be measured by cash flows; Cash is king and it is a positive cash flow that will keep a new company afloat while the company builds profits.