Anyone working in business should have at least a basic understanding of business accounting principals and how they work. The simplest explanation of business finances looks only at profit and loss: either a business makes money or it loses money. The reality is that more goes into it than that. Real understanding of the economics of a business requires knowing how much money comes into the business and where it comes from, and how much money leaves the business and where it goes. In part, the answer to where the money goes can be found in looking at accounts payable.
Learn the basic terminology of accounting. If you have never been exposed to accounting, the terms used in accounting practice can sound almost like a foreign language. If you want to become an accountant, you need to enroll in college classes that teach much more than the basics and will prepare you to become certified. For basic bookkeeping, however, you can teach yourself what the words mean by reading books and articles on basic accounting principles. You will find that a generally-accepted broad definition of accounts payable is money that a company owes to someone outside the company.
Practice with a ledger sheet. Once you understand what accounts payables includes, you can start learning how to record and work with accounts payable. Just as with learning the terminology, many books and articles discuss the basics of how to work with the bookkeeping aspect of accounts payables. Two methods exist for recording accounts payable. The easiest to work with is the net method where you enter the actual amount the company has to pay. Accounting books will give you numbers you can work with so you get used to the practice of reducing the total by percentage discounts or reduced interest charges for early repayment.
Learn how accounts payable impact other aspects of business accounting. Learning to record the numbers in a ledger book only starts the process of learning to understand accounts payable. The next step requires you to understand the role of accounts payable numbers in working with other accounting principals such as accounts receivables, gross profit and net profit. Accounting textbooks provide much of the information you will need to learn, and asking an accountant or bookkeeper to clarify confusing terms and practices will also help you learn the details.
Practice putting all the accounting pieces together. The concepts of accounting do not sound complicated. In theory they make sense, but putting them on paper and learning to manipulate them to extract all the financial data they can provide takes practice. The act of actually entering the numbers and doing the math will help cement in your mind how the process works.
Consider enrolling in a basic accounting class at a local community college. Having an instructor not only gives you an expert to answer your questions in more detail than a book will go into. Fellow classmates give you the chance to discuss concepts and principals so you get a clearer grasp.
Double check your work. If you are working on accounts payable for an actual business, a single mistake in the math or transposing even one number can have serious results.
- Consider enrolling in a basic accounting class at a local community college. Having an instructor not only gives you an expert to answer your questions in more detail than a book will go into. Fellow classmates give you the chance to discuss concepts and principals so you get a clearer grasp.
- Double check your work. If you are working on accounts payable for an actual business, a single mistake in the math or transposing even one number can have serious results.
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