Accounting Guides

What Is Stock Control

Stock control means keeping a current count on all of the products that are in your business. When a product is sold, the stock control should be reduced by one item. This allows for reordering to be done with ease. There are several different types of stock within a normal small business, included among these are:

  • Work in progress – stock of unfinished products
  • Goods ready for resale
  • Raw materials and components to make a new product
  • Consumables – including stationery and printer supplies

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Fixed Asset

Fixed assets are defined as assets which the business owns for the purpose of facilitating business and which has a remaining life span of over one year. These assets will appear on the accounts as part of the balance sheet. If you have a small business that is a limited company, you are required by HMRC to keep accurate records of all of your business equipment in a fixed asset register.

Depreciation Accounting

Depreciation accounting is used to write off the proportion of an asset or group of fixed assets on a balance sheet over a given period. Assets will depreciate at various rates, from 3 years to 20 years depending on the use of the equipment and its manufacturer recommendations. Items such as furniture, computers, machinery and plant equipment have useful lives of more than one year, so their impact continues on to the following tax years throughout the lifetime of their usefulness.

Purchase Invoice

Once you have received a purchase invoice from one of your suppliers you will need to check all of the details to ensure that there have not been any mistakes. It is always easier to correct an invoice prior to making payment on it and prior to it becoming due. It could be any purchase receipt, for services or goods and can also include utility bills and rent.

Payment of a purchase invoice

It is advisable to always pay your supplier invoices on time.

Petty Cash

If you run a small business then you will find that there is a need to use petty cash; this is the money that is withdrawn from the bank account and used to buy small everyday essential items like milk and tea or coffee and biscuits, stationery and postage. Your business should have procedures in place that relate to the handling of petty cash, and keep a ledger current with deductions made from it.

Bank Reconciliation

In order to properly complete a bank reconciliation you will need to begin by comparing the transactions listed in your cash book to the transaction which the bank has listed on your bank statements. Any differences that you notice in either a credit or debit will need to be recorded in a bank statement reconciliation. Whenever your statement becomes available it is a good time to do your reconciliation.

Credit Control

If you run a business that provides credit to customers, it is important that you put a strict credit control policy in place and review it on a regular basis. It can be difficult to contact a customer to request payment but there are steps that you can take to make it as easy and effective as possible. The only way to start with credit control is by fully explaining at the outset of the credit offer, before it is accepted, what the repayment schedule is and what options exist for falling behind on a payment, such as skip a payment or double the next payment, or even spread a missed payment out across the next two to three payments.

Journal Entries

When you need to transfer money from one account to another you will need to make a journal entry and adjust the ledgers as required. There are many different accounts in the profit and loss balance sheet and there could be many different reasons why and adjustment needs to be made.

If you are using accounting software it will create a double entry which debits the bank account and credits whatever account the money is going to.