Principles used by Bookkeeping Services Brisbane

Principles used by Bookkeeping Services Brisbane

bookkeeping tabBookkeeping creates extreme reactions in people. For most people it is an extremely boring manual task. Some people consider it the intellectual equivalent of clerk’s work. For few people however bookkeeping is the language of business and intellectually stimulating and fun to learn.

However, learning bookkeeping can be made in fun if certain principles are kept in mind. Bookkeeping services Brisbane is one such firm that keeps these principles are mine. The principles used by Bookkeeping services Brisbane are the following:

  1. Asset = liability + equity for every transaction – every financial transaction should be seen with this equation in mind which will always balance.
  2. Debit the increase on asset side and credit the increase on liability or equity side – which can be remembered by the acronym DICI. The burdensome debits and credits will become lot less tiresome if this equation Is kept in mind
  3. BASE or Beginning + Addition – Subtraction = Ending, this equation can be used to manage the accounting of many transactions,
  4. BTDC or Buyer + Target +- Deal Changes = Consolidation, this acronym can be used to understand merger transactions
  5. Behind all valuation formulas is the simple principle – project the cash flows, discount them and sum them up, thus by analyzing financial statements the analyst is trying to project cash flows
  6. Valuation done by Bookkeeping services Brisbane can be of three types – past record value, present value and investment value, past record value assumes that the future will be same as past, present value is calculated on the basis of certain assumptions whereas investment value is speculative value
  7. All investment should be done on the principal of margin of safety – margin of safety can best be explained by the example of Bridge construction. If you want to construct a bridge where at the most 100 trucks will pass, you construct a bridge that can take the load of 150 trucks, the extra cushion being the margin of safety for unforeseen events, the larger the margin of safety more the bridge is robust for unforeseen events.

Bookkeeping cannot be learned overnight. It takes time and practice to learn the complex art of bookkeeping. It is useful to imagine learning bookkeeping in four stages. The first stage is unknown un- competence; this is a stage where you don’t even know that accounting is a complex art to master about which you know nothing. Second stage is conscious un-competence, the stage where you know that you do not know something. Third stage is conscious competence, where you have learned to do something. However, this is not the final stage. Final stage of learning book keeping is when you can do it intuitively, this is something called unconscious competence.

Any kind of expertise takes time to build. The research shows that people who have mastered an art for 10,000 hours are a cut above the rest. So stop worrying, keep the basic principles outlined in the article in mind and start putting in those 10,000 hours.


Leave a Reply

Your email address will not be published. Required fields are marked *