I am new to bookkeeping and this forum and would appreciate some help and support.
After doing my training and passing my level 2 ICB exams, I felt fairly competent. My first client (who was short lived) used a Sage package. I entered his invoices OK but then there were all these little anomalies which I would have known how to deal with if I had more experience. This made me feel as if I were in over my head. To gain some experience, I have purchased a Sage package to practise on at home with my own accounts for my small holiday letting business. My question is; I know I need to enter opening balances and understood that I enter these from the balance sheet, however should there be a figure under the profit & loss account. I start doing things and think I am getting more confident but then something else happens and I think, I don't know what I am doing. Please help!
How comfortable are you with your knowledge base related to the P&L and B/S?
Do you know where everything that you input should end up in the final accounts?
Do you feel that maybe you need to do the ICB level III computerised before offering services to the public?
If you don't fancy doing the actual exam why not order some ICB level III past papers from them and work your way through to final accounts for several different companies.
The more practice that you get at the higher level the more confident you will become.
For some people AICB is enough but for others they are just not ready for self employment at that level. It doesn't mean that you don't know what you are doing, it just means that maybe you need to take your foot off the accelerator a little and review your knwledge base by studying at the higher level.
Sometimes in life we just need to take one step back in order to move two forwards.
On the P&L question, remember that you will need to include things like current period depreciation.
HTH,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I understand P&L and B/S and what goes where and depreciation. I am just not sure what figures are transferred as the opening balances to the second year of trading. I would need to know these whether I am doing manual or computerised accounts.
I have started training on ICB level III manual but I have found it quite difficult to concentrate as my husband isn't well. Your reply is the push I need to get started on it again and the idea to have a go at past papers is a good one.
What I find difficult to comprehend is people who make postings to the ICB forum saying they have done all sorts of things since gaining their AICB, I just don't unerstand how they have the knowledge especially when they haven't worked in a bookkeeping environment before. The same goes for completing Self Assessment Tax Returns. Previously, I worked in HMRC (taxes) for 10 years and found I did't know everything to answer the questions for the ICB SA diploma so I don't know how anyone else can from the ICB book. My reason for starting in business was really to use the tax knowledge I already have for completing SA tax returns.
Christy wrote:What I find difficult to comprehend is people who make postings to the ICB forum saying they have done all sorts of things since gaining their AICB, I just don't unerstand how they have the knowledge especially when they haven't worked in a bookkeeping environment before.
There are a lot of variables to consider when you read things as you have over on the other site.
1) Not everyone is always completely truthful when telling others of their successes so you need to factor in a pinch of salt to some stories.
2) Some people read the bear minimum to get through their studies, others studied the subject inside out.
3) Some have background experience in the subject matter
4) Some have taken other qualifications as well as ICB
5) A very few understand bookkeeping implicitly with hardly any teaching.
6) Some have easier clients than others (not all engagements are equal).
7) Some have no idea that they are getting everything wrong
8) Some get by on the bare minimum getting others to do the work for them.
9) Some have clients who do 90% of the work correctly
10) Some have clients who think that they have done 90% everything correctly!
That's a quick short list that I'm sure that others could add dozens more scenarios to.
What I'm trying to put across is that you shouldn't allow other peoples bravado put you down. You are your own person and need to build on your strengths rather than compare yourself to others espechially where one may not be comparing on a level playing field (see (1) above).
On the self assessment front I know that there must be a market for that as one accountant freind of mine's practice did nearly six hundred in January.... But, many of those linked back to the fact that they were also doing the accounts for their businesses.
The worrrying point though about that last sentence was that the accountants were knocking out SA returns very quickly and did not outsource anything. (And then of course they complain to me that they hardly get to sleep in January).
There's a strength straight away that you can use. Have you thought about using your ten years of HMRC knowledge to sell yourself into temp roles in practice during January and then maybe using that as a foothold to gain more experience?
On the ICB exams in something that you already know. Don't worry too much on thatt one. There are two completely seperate states of mind. Learning to pass exams and learning to do the job.
In some ways going to an exam with an existing knowledge base can work against you espechially when how things are done in the real world does not tie to the book.
Remember that the people marking the exam papers will often have little or no real life experience so if your answers differ from standard text you may unfairly lose marks even where your answer was correct... If you want to see examples of that just look at some of the tax debates on here or accounting web where qualified and experienced people often have diametrically opposing views and on many occassions you will find that both are right.
The ICB states that you should not do anything that you are not competent to do. You have ten years experience working for HMRC in self assessment so you probably didn't need that qualification anyway. (can't remember the thread where James made that comment but that is coming from something that he said).
Oops, I'm off waffling again.
Hope that something in the above helped to recharge your batteries slightly after taking the knock of losing a client.
Good luck going forwards Christy,
kindest regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks for your replies, encouragement and ideas which I will certainly take on board.
To get back to my original question, having used Sage, I understand that the expenses from the P&L account are totalled up and go under 3200. So if books had been kept manually you would use the total of the expenses from the P&L account & enter it as an opening balance under 3200. If I am continuing to do accounts manually, I would total up the expenses from the P&L account and then how do I show them for the following year? I understand the figures from the B/S would be carried forward to the next year but I don't understand this bit about the P&L account figures. Sorry to be a bit of a simpleton but it is the only way to learn.
Say you have a simple TB at the year end as follows
Dr Cr
Sales 10,000
Purchases 5,000
Motor Expenses 2,000
Bank 2,000
Debtors 2,000
Share Capital 1,000
Total 11,000 11,000
Your accounts would look like this
P&L
Sales 10,000
Less Purchases 5,000
Less Motor Expenses 2,000
Profit 3,000
Balance Sheet
Debtors 2,000
Bank 2,000
Total Assets 4,000
Capital
Share Capital 1,000
Profit and Loss Res 3,000
Total Reserves 4,000
You need to clear out all your P&L accounts on the trial balance to the P&L reserve (A/C 3200)
Journal to do this is
Dr Sales 10,000
Cr Purchase 5,000
Cr Motor Exps 2,000
Cr P&L Reserve (A/C3200 in SAGE) 3,000
This will leave your Trial Balance at the start of the 2nd year looking like this
Sales 0
Purchases 0
Motor Expenses 0
Debtors 2,000
Bank 2,000
Share Capital 1,000
Profit and Loss Res 3,000
Total 4,000 4,000
All you have done is reversed the profit and loss accounts into the profit and loss reserve and carried forward the balance sheet accounts so leaving you with a blank slate for your P&L accounts for your 2nd year to start recording transactions.
