How do I master my small business’ accounting and financials?

December 2, 2008 7:19 AM

How do I master my small business’ accounting and financials?

My wife and I own a small retail shop. We do our accounting faithfully in QuickBooks and file most of our tax returns and process our own payroll. According to review by our accountant, we are running our numbers correctly, but what do all these numbers mean? We want to have a better understanding of cash flow, profit and loss, and our balance sheet so we can make better financial decisions. Are there any books or online courses that teach this well? Ideally, any course would have tests so we can really measure how much we are learning. This looks intriguing, but I wanted to see if there were resources out there that are escaping my googlebatics.

posted by battlecj to education (4 comments total)

Whoops, copy & paste didn't carry my link over.

It should have read, "This looks intriguing,..."
posted by battlecj at 8:44 AM on December 2, 2008

I just took a fundamentals of accounting course through ed2go.com. The material was good, and there are quizzes you can take for each chapter (plus a general quiz on all the material so you can monitor your progress), it wasn't a horrible way to do it though it's only sort-of self-paced (the chapters become available 2 per week, but you can sit on them until they're all up if you wanted to blow through). It's just got a final exam (which is maybe not intentionally open-book, but there's nothing stopping you, and given that the test is available for two weeks and you are encouraged to download and work on it before actually submitting your answers, maybe that's actually the idea) for completion. There are fairly good summaries of each course available to look at before you decide on a class.

For my situation, it was a pretty good course. I'm an accounting software consultant, but I'm more a geek than a bean-counter, and everything I knew about accounting came from working with the software. It kind of sounds like you're in a similar situation, you know what you need to know, but only what you need to know, so you may find the presentation similarly appealing. There's no talk of this software or that, it's all very ledger-style "here's how AP happens, here's how AR happens, this is the result in the GL and why". I'd say start with Fundamentals I and then jump to one of their Quickbook classes before considering Fund II, which is corporate accounting.

You may (in addition to training courses) want to pick up the Missing Manual book for your version of QB. There's a lot of good information in there, including how data flows into your Cash Flow, P&L, and Balance Sheet reports.
posted by Lyn Never at 8:49 AM on December 2, 2008

You might try The McGraw-Hill 36-Hour Course in Accounting by Robert L. Dixon, Harold E. Arnett, and Howard Davidoff. I used this book when I was a beginning accounting student to supplement my coursework, and I found it helpful in understanding the concepts. It contains a study plan and self-tests for each chapter.

Another book I liked when I was starting out is Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports by Thomas Ittelson. (This book needed a better proofreader, though - there are several errors that are particularly annoying in a book about financial statements, such as confusing the words principal and principle).

I've also heard good things about The Accounting Game by Judith Orloff, although I haven't read it.
posted by velvet winter at 10:55 AM on December 2, 2008

How novice are you? And how advanced do you want to go? If you're looking to get a better understanding of what you're looking at and about the concepts involved, but don't want to get too deep into the actual debits and credits and t-account exercises, I can highly recommend the Portable MBA series.

If you actually do want the t-accounts and to understand the accounting behind the finance, I'm seconding velvet winter's suggestion about the McGraw-Hill 36 Hr Accounts book.

Good on ya, by the way, for wanting to learn more about how the numbers side of your business works! I'm always a little amazed at how many people don't.
posted by Grrlscout at 1:34 PM on December 2, 2008