From Gregacct.com archives

    For an individual going into business experience has clearly indicated that an adequate recordkeeping system helps increase the chances of success and decrease the chances of failure. Similarly, for the established business a good system of record- keeping will increase the chances of staying in business and earning a larger profit.

A good recordkeeping system should be:

1. simple to use
2. accurate
3. reliable
4. consistent
5. easy to understand
6. designed to provide information on a timely basis.

    How do records help to increase the chances of your success? The easiest way to answer this question is to list some of the information that an adequate system of records can furnish. Your records should provide the following information:

    How much business (sales, both cash and credit) are you doing?

    How many dollars worth of those sales are on the books as an accounts receivable?

    How are your collections, do they turn over every 30 days, or are they generally on the books for a longer period of time? What are my losses from credit sales? Who owes me the money, and should I continue to extend this client credit? How soon can I expect to realize cash from my accounts receivable? Would a discount help to turn my accounts receivable around sooner, can I afford to give a discount?

    How much cash do I have on hand and in the bank? Can I meet my monthly or weekly debts with this amount? Does the amount of cash I have agree with what I should have or am I short. Why am I short?

    How much inventory do I have? How often is my inventory turned over? What portion of my inventory turns over the most, am I pushing that portion of my business hardest? What kind of profit am I generating on that inventory? Can I generate more profit and keep my sales figures up?

    How much gross profit did I earn in the month? What was my net profit for the month? Are my sales, expenses, profits showing improvements, or did I do better last year than in the current year?

    What were my expenses for the month? Where could I cut these expenses? Should these expenses be cut, or are they vaild?