Introduction
Welcome to this Empress guide! Today, we’ll be exploring the Accounting Entries feature, an essential tool for managing your business’s financial transactions. This tool is designed to help you keep track of your financial activities, making it easier to analyze your business’s performance and make informed decisions.
Getting Started: Initial Investment
Let’s say you’ve just invested $25,000 into your business, much like Mama, who invested a similar amount to start his tea stall. In Empress, this initial investment is considered a liability because it represents what your business owes you. To record this in Empress, you would credit your account with $25,000. Simultaneously, your business’s cash balance increases, so you would also debit the “Cash” account with the same amount.
Acquiring Assets for Your Business
Just like Mama, you might need to buy equipment and raw materials to get your business up and running. These purchases are recorded in Empress as either “Fixed Assets” (items with a long useful life like equipment) or “Current Assets” (items used daily like raw materials).
When you make these purchases, you’ll debit the “Equipments” and “Stock in Hand” accounts in Empress. If you pay part of the cost upfront, you’ll credit the “Cash” account with that amount. Any outstanding amount owed to the supplier is also recorded as a credit in Empress.
Recording Sales and Income
In Empress, it’s easy to track your daily sales and income. For example, if you sell 325 units of a product for a total of $1,625, you would credit the “Sales” account with that amount and debit the “Cash” account by the same figure.
If you used $800 worth of raw materials to produce the sold items, you would credit the “Stock in Hand” account by $800 and debit the “Cost of Goods Sold” account with the same amount.
Tracking Monthly Expenses and Booking Profit
With Empress, you can also keep track of your monthly expenses like rent and salaries. At the end of the month, you can use Empress to calculate your profit. This is achieved by resetting the Profit and Loss accounts and transferring the profit to the Liability account.
For example, if your net sales are $40,000 and your expenses are $20,000, your profit is $20,000. To book this profit, you would debit the “Profit or Loss” account and credit the “Capital Account”.
Summary
The Accounting Entries feature in Empress gives you a clear, user-friendly interface to manage your financial transactions, track sales and income, monitor expenses, and calculate profits. By mastering this feature, you can have a better understanding of your business’s financial health, enabling you to make informed decisions and drive your business’s success.
For more guidance or support with using Empress, check out our online resources or contact our support team. Happy accounting!