Bookkeeping Services Malaysia takes care of the process of recording and organising your business’s financial transactions. The assigned bookkeepers of a Malaysia Accounting Services perform a series of jobs for your company such as recording transactions, sending invoices, making payments, managing accounts and preparing financial statements, based on the service contract. If you’re in the process of engaging bookkeeping and accounting services, or switching from one provider to another, it will be a good idea to review some basic bookkeeping concepts to strengthen your understanding of the ebb and flow of this important business function.

Bookkeeping Services Malaysia

Single vs. Double Entry Bookkeeping: Single-entry is an incomplete system in which only one side of a transaction is recorded. This system amounts to a list of all transactions and is only suitable for very small businesses. Double-entry is a complete bookkeeping system which records both sides of all transactions. As all the transactions have to be balanced, mistakes are extremely easy to spot, making the double-entry system virtually error-proof. This system is suitable for all types of business operations.

Balance Sheet: A balance sheet shows the exact financial status of a business. Balance sheets have three main components:

        • Assets – resources used by the company to operate
        • Liabilities – debts held by the company
        • Owner’s equity – share of company assets owned by the owners/shareholders.

The statement is based on a simple business equation: Assets = Equity + Liabilities, and the three components have to balance.

Income Statement
An Income Statement, also known as profit and loss statement, is a report that shows how much money your company spent, and how much revenue was made, during a given period. It tracks the following items:

        • Total revenue – all income for services rendered and products sold;
        • Total cost of goods sold (COGS)- expenses directly related to generating sales revenue, such as raw materials;
        • Total expenses – things you have to pay for in order to keep your business going (administrative costs, wages, taxes, equipment costs, etc). Together, these three data points allow you to calculate your net income, or how much money you have left to reinvest in your business and/or take home.

This is why it is important to keep track of every revenue stream and every expense. Only then will you get a complete picture of what your net income is.

Cash Flow Statement
Cash Flow Statement is where you’ll find the answer to “Why doesn’t my bank account balance match the amount of revenue made?”.  These statements indicate your sources of revenue, what that cash was used for, and the resulting change in balance over time.

Cash vs. Accrual Basis Accounting
The difference between Cash vs. Accrual Basis Accounting is in the timing, i.e. when transactions are recorded. Cash-based accounting records revenue and expenses when money changes hands, not unsimilar to the simple to operate single-entry data system. But it only focuses on cash. Accrual accounting records all transactions at the time they are made, which is often before money has actually been exchanged. As it covers every aspect of business operations, accounting for cash, credit and advances, it is a far more complex and accurate system, and closer to the double-entry system.