When faced with a mound of paper, in banker boxes and in drawers it can all appear overwhelming and insurmountable. Months or even years of no data entry, it’s enough to make a grown bookkeeper weep.

Something can be done about it, as distasteful as it may seem. Start somewhere.

The basic idea of bookkeeping – CASH IN, CASH OUT. This command tells you where to start, no matter what the boss or the client says. After all, the boss or the client created the mess in the 1st place….right?

So….start with CASH IN, CASH OUT. What’s that in the real world? It’s the bank accounts where money comes in to the business and exits the business for day to day bills and expenses.

Your weapons of choice in this quest are the sequential bank statements covering the period of no data along with the super QuickBooks tool of “remembering transactions”.

You can have QuickBooks pre-fill new transactions based on previous transactions.

To do this task

You can always override any pre-filled information in a transaction.

Bad news? At first, the data entry task will be huge. Good news? As you proceed with your data entry, based on the sequential bank statements, you will build up the history of transactions in QuickBooks. Each entry gets you closer and closer to your goal of re-creating a true and accurate picture of how the business lives and breathes.

Long ago, after proudly surviving my first formal accounting classes, I was confronted by Tom, a CPA friend of mine, with a mind numbing quiz. If you’re so smart Mr. Tim, then tell me, what is a debit and what is a credit?

I proceeded to launch into a picture perfect and lengthy explanation of debits and credits. When I finally finished my erudite spontaneous pontification on “debits and credits”, Tom loudly chided me, saying “FLUNK – debits on the left, credits on the right”.

Remember that one – I sure did.

DEBITS ON THE LEFT <<========>> CREDITS ON THE RIGHT

That’s it – very simple actually; debits on the left, credits on the right.

In today’s double entry bookkeeping system, instead of using one column for each account and entering one number as positive and the other as negative, we use two columns for each account with only positive numbers. Whether the entry increases or decreases the account is determined by choice of the column in which it is entered. Entries in the left column are referred to as debits, and entries in the right column are referred to as credits.

In double entry bookkeeping, at least two accounts are impacted by each transaction, and one of those entries must be a debit and the other entry must be a credit of equal amount. To complicate things further, more than two accounts can be used if the transaction is split among them, as long as the sum of debits for the transaction equals the sum of credits. Oddly enough, they must balance (cancel each other out, if you think about it) to zero.

That’s one of the beauties of QuickBooks – the user is spared the decision making process of “what do I enter here…..debit or credit?”.

The truth is, whether a debit or a credit increases or decreases an account balance depends on the type of account. Asset and expense accounts are increased on the debit side – liability, equity, and revenue accounts are increased on the credit side.

QuickBooks obscures the credit/debit aspect of transactions, which is not always a good thing. That QuickBooks strength can also be a curse. If you don’t “grok” the concept of debits and credits as they apply to specific types of accounts, QuickBooks may allow you to merrily enter transactions incorrectly.

That’s where the double entry bookkeeping system can help – it provides a system of checks and balances.

By adding up all of the debits and adding up all of the credits and comparing the two, differences stick out like a sore thumb and you have the chance to correct any errors. When debits and credits don’t match – the “double entry bookkeeping” system  loudly tells you something is wrong and needs correction. In fact, QuickBooks will actively prevent you from entering “out of balance” (meaning the debits and credits don’t match) transactions. However, QuickBooks will NOT always stop you from incorrectly assigning debits and credits to your accounts.

To avoid confusion over debits and credits, don’t think of them in the way they are used in everyday language.

You may be confused because you thought a credit was a good thing! We learned these terms from dealing with banks and stores, but they were using the terms from their perspective.

When the bank gave you a “credit”, it was their Cash they are crediting, or subtracting from.

Good for you, not good for the bank.

As a business owner, think of debits and credits from your company’s point of view. When you debit your Cash, you add to it. When you credit your Cash, you subtract from it.

When you put cash in the bank, the bank now is obliged to pay it back to you, which is a liability and therefore a credit (increase) of their liability to you. So the teller tells you your account has been “credited”.

See how this can get confusing now? See how the two of you, your company and the bank mirror image each other? The “credit” from the viewpoint of the bank is, in fact a debit from your business point of view. Fascinating (as Spock would say), if you think about it.

The confusion can be eliminated by remembering the basic concept.

Debit refers to the left ; credit refers to the right.

And no, it does not mean Democrats are debits and Republicans are credits.

What do you think? Has this helped shed light on the subject?

Working at your office in Yorba Linda or from my office securely over the Internet, I am available on a weekly, monthly, quarterly, or as needed basis for a wide range of services:

• Installation and Set-Up of QuickBooks®
• QuickBooks® Training and Support
• Financial Statement Preparation & Analysis
• Create and Save Reports That Make Sense
• Accounts Payable Help
• Accounts Receivable Help
• Payroll
• Bank Reconciliations
• Work With CPA or Accountant for Tax Return
• Cash Flow Analysis
• Budgets
• Workers’ Compensation Reports
• W-2 and 1099 Forms
• Special “Cleanup” Project

Serving These Locations:

Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel,  Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange,  Placentia,  Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach,  Stanton, Tustin, Trabuco, Villa Park, Westminster, Yorba Linda

Working at your office in Westminster or from my office securely over the Internet, I am available on a weekly, monthly, quarterly, or as needed basis for a wide range of services:

• Installation and Set-Up of QuickBooks®
• QuickBooks® Training and Support
• Financial Statement Preparation & Analysis
• Create and Save Reports That Make Sense
• Accounts Payable Help
• Accounts Receivable Help
• Payroll
• Bank Reconciliations
• Work With CPA or Accountant for Tax Return
• Cash Flow Analysis
• Budgets
• Workers’ Compensation Reports
• W-2 and 1099 Forms
• Special “Cleanup” Project

Serving These Locations:

Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel,  Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange,  Placentia,  Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach,  Stanton, Tustin, Trabuco, Villa Park, Westminster, Yorba Linda

Working at your office in Villa Park or from my office securely over the Internet, I am available on a weekly, monthly, quarterly, or as needed basis for a wide range of services:

• Installation and Set-Up of QuickBooks®
• QuickBooks® Training and Support
• Financial Statement Preparation & Analysis
• Create and Save Reports That Make Sense
• Accounts Payable Help
• Accounts Receivable Help
• Payroll
• Bank Reconciliations
• Work With CPA or Accountant for Tax Return
• Cash Flow Analysis
• Budgets
• Workers’ Compensation Reports
• W-2 and 1099 Forms
• Special “Cleanup” Project

Serving These Locations:

Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel,  Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange,  Placentia,  Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach,  Stanton, Tustin, Trabuco, Villa Park, Westminster, Yorba Linda

Working at your office in Trabuco or from my office securely over the Internet, I am available on a weekly, monthly, quarterly, or as needed basis for a wide range of services:

• Installation and Set-Up of QuickBooks®
• QuickBooks® Training and Support
• Financial Statement Preparation & Analysis
• Create and Save Reports That Make Sense
• Accounts Payable Help
• Accounts Receivable Help
• Payroll
• Bank Reconciliations
• Work With CPA or Accountant for Tax Return
• Cash Flow Analysis
• Budgets
• Workers’ Compensation Reports
• W-2 and 1099 Forms
• Special “Cleanup” Project

Serving These Locations:

Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel,  Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange,  Placentia,  Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach,  Stanton, Tustin, Trabuco, Villa Park, Westminster, Yorba Linda

Working at your office in Tustin or from my office securely over the Internet, I am available on a weekly, monthly, quarterly, or as needed basis for a wide range of services:

• Installation and Set-Up of QuickBooks®
• QuickBooks® Training and Support
• Financial Statement Preparation & Analysis
• Create and Save Reports That Make Sense
• Accounts Payable Help
• Accounts Receivable Help
• Payroll
• Bank Reconciliations
• Work With CPA or Accountant for Tax Return
• Cash Flow Analysis
• Budgets
• Workers’ Compensation Reports
• W-2 and 1099 Forms
• Special “Cleanup” Project

Serving These Locations:

Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel,  Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange,  Placentia,  Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach,  Stanton, Tustin, Trabuco, Villa Park, Westminster, Yorba Linda

Working at your office in Stanton or from my office securely over the Internet, I am available on a weekly, monthly, quarterly, or as needed basis for a wide range of services:

• Installation and Set-Up of QuickBooks®
• QuickBooks® Training and Support
• Financial Statement Preparation & Analysis
• Create and Save Reports That Make Sense
• Accounts Payable Help
• Accounts Receivable Help
• Payroll
• Bank Reconciliations
• Work With CPA or Accountant for Tax Return
• Cash Flow Analysis
• Budgets
• Workers’ Compensation Reports
• W-2 and 1099 Forms
• Special “Cleanup” Project

Serving These Locations:

Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel,  Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange,  Placentia,  Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach,  Stanton, Tustin, Trabuco, Villa Park, Westminster, Yorba Linda

Working at your office in Seal Beach or from my office securely over the Internet, I am available on a weekly, monthly, quarterly, or as needed basis for a wide range of services:

• Installation and Set-Up of QuickBooks®
• QuickBooks® Training and Support
• Financial Statement Preparation & Analysis
• Create and Save Reports That Make Sense
• Accounts Payable Help
• Accounts Receivable Help
• Payroll
• Bank Reconciliations
• Work With CPA or Accountant for Tax Return
• Cash Flow Analysis
• Budgets
• Workers’ Compensation Reports
• W-2 and 1099 Forms
• Special “Cleanup” Project

Serving These Locations:

Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel,  Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange,  Placentia,  Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach,  Stanton, Tustin, Trabuco, Villa Park, Westminster, Yorba Linda