Free Bookkeeping Course
This page contains our free online bookkeeping course. It will teach you the basics of bookkeeping, including the principles of double-entry bookkeeping.
The Course Covers:
The basics of double-entry bookkeeping
Fundamental bookkeeping terminology
Understanding debits and credits
How to compile basic bookkeeping reports
Everything you need to start bookkeeping!
Course Modules:
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Lesson 1: An Introduction to Bookkeeping
Lesson 2: Bookkeeping & Accounting Terms
Lesson 3: Double Entry Bookkeeping Basics
Lesson 4: Using and Closing T Accounts
Lesson 5: Financial Statements
To start the bookkeeping course, scroll down.
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This course is FREE, and no registration is required!
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Jump to:
An Introduction to Bookkeeping​
Bookkeeping Terminology Explained
Double-Entry Bookkeeping Explained
FREE Online Bookkeeping Course
Part 1: An Introduction to Bookkeeping
Module overview:
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An Introduction to bookkeeping
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Bookkeeping definition
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Accountant definition
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Why bookkeeping is needed
1.1 What is a bookkeeper?
A bookkeeper keeps a record of the financial/accounting transactions of a business, company, or other entity. These records are called the accounts or the "books", hence the term bookkeeper or book-keeper.
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Accounts can be referred to as "books", as traditionally, accounting transactions were manually recorded in various books or ledgers, such as a sales book, a purchases book, and a cash book.
1.2 What is bookkeeping?
Bookkeeping is the term used to describe the recording of financial/accounting transactions of a business, company, or other entity.
When someone does the bookkeeping, they keep financial records and organise all financial transactions related to sales, revenue, expenses, purchases, bank accounts, liabilities, and assets.
Pitstop Practice!
Explain:​​
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What is a bookkeeper?
What does a bookkeeper do?
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Okay? Continue!
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1.3 Why do you need a bookkeeper? Why does bookkeeping need to be done?
Accurate bookkeeping is needed for many reasons. Here are the three main reasons:
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It is a legal requirement. Governments require businesses to maintain accurate financial records.
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Financial analysis. With accurate and up-to-date accounting records, it's possible to analyse the financial health of an entity, including an entity's profitability, money owed to suppliers, money owed from customers, sales performance, growth forecasts, etc.
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Taxation. Accounting records enable the calculation of any taxes owed to governmental bodies.
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An accurate set of accounts is compiled using a bookkeeper and accountant unless you understand bookkeeping or accounting yourself.
1.4 What is an accountant?
The terms 'bookkeeper' and 'accountant' are sometimes used interchangeably. Still, accountants generally focus on an entity's year-end financial statements and tax calculations, whereas bookkeepers keep records of the day-to-day transactions of an entity.
Part 2: Financial Terms Explained
Module overview:
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An introduction to bookkeeping terminology
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Capital
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Assets
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Liabilities
2.1 What is capital?
Capital is the money a business owner has personally invested in a business or entity. Capital is also referred to as equity. Capital and equity are amounts the company owes to the business owner.
2.2 What are assets?
An asset is an item a business or company owns that has value. Typical assets include office furniture, computer equipment, vehicles, property, machinery, debts owed to the entity (accounts receivable), and cash.
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Assets do not have to be tangible; they can be intangible, but most assets are tangible. Examples of intangible assets are websites, software, and patents.
2.3 What are liabilities?
A liability is something that a business owes. They are usually in the form of debt - debts owed by the company.
Typical liabilities include bank loans, credit cards, finance and lease agreements, taxes, and money owed to suppliers.
Pitstop Practice!
Explain:​​
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What is capital?
What are assets?
What are liabilities?
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Okay? Continue!
If not, ensure you watched the video
Part 3: Double-Entry Bookkeeping Explained
Module overview:
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An introduction to double-entry bookkeeping
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Double-entry bookkeeping definition
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Debits and credits explained
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Purchases, assets, liabilities, sales, expenses
3.1 What is double-entry bookkeeping?
Double-entry bookkeeping is an accounting method which entails at least two entries for every financial/accounting transaction. These entries consist of debits and credits - every accounting transaction will have a debit entry and a corresponding credit entry.
3.2 What are debits and credits?
The terms 'debit' and 'credit' refer to the different sides of accounting transactions. Every financial transaction of an entity will have at least one debit entry and one credit entry.
3.3 Debits and credits explained
The easiest way to understand debits and credits is to use the PEARLS acronym:
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P = Purchases
E = Expenses
A = Assets
R = Revenue
L = Liabilities
S= Sales
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PEA are debit entries, and RLS are credit entries. So, a sale (S) is a credit, and an expense (E) is a debit.​
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Some key things to remember are:
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Money into the business bank account is a debit. Money out is credit.
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Bank balances (cash) are considered assets.
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Expenses incurred are debited, but expenses owed (liabilities) are credited.
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Sales are credit, but sales owed to the company (assets) are debit.
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Watch the video for a detailed explanation.
3.4 Debit and credit examples
A payment for an expense from the company bank account:
Debit expense account
Credit company bank account
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A payment received from a sale into the company bank account:
Debit the company bank account
Credit the sales account
A payment for office equipment from the company bank account:
Debit asset account
Credit company bank account
A loan received into the company bank account:
Debit company bank account
Credit liability account
Pitstop Practice!
Explain:​​
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What is capital?
What are assets?
What are liabilities?
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Okay? Continue!
If not, consider my Accounting Mentor Program
Part 4: Nominal Accounts Explained
Module overview:
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Debits and credits continued
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Nominal accounts explained
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Sales and expense accounts
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Asset and liability accounts
4.1 What are nominal accounts (t-accounts)?
Nominal accounts are the accounts to which debits and credits are posted. They are traditionally called t-accounts.
Expenses, sales, assets, and liabilities are categorised into specific items. For example, the expense accounts will have separate accounts for all the company's expenses, such as electricity, stationery, travel, and rent, among others. Each of these accounts is a t-account.
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T-accounts are also named nominal accounts. All the nominal accounts combined are collectively referred to as the nominal or general ledger.
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A company's general ledger may look something like this:
4.2 General Ledger Example
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Asset Accounts
Office equipment account
Tools and machinery account
Motor vehicle account
Company bank account
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Liability Accounts
Bank loan account
Suppliers account
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Sales Accounts
Shop sales account
Website sales account
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Expenses Accounts
Rent account
Stationary account
Staff wages account
Electric account
Travel account
Software account
Bank charges account
Bank interest account
Training account
Part 5: Financial Statements Explained
Module overview:
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Financial statements
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Profit and loss statement
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Balance sheet
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Compiling financial statements
5.1 What is a profit and loss statement?
A profit and loss statement shows a company's profitability for a selected period. It lists the entity's sales and expenses.
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A profit and loss statement typically displays gross and net profit, often referred to as gross margin and net margin.
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The equations for gross and net profits are:
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Gross profit = Sales minus Cost of Sales
Net Profit = Gross Profit minus Expenses(Overheads)
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A profit and loss statement's primary purpose is to display an entity's overall profitability (financial performance).
5.2 What is a balance sheet?
A balance sheet lists an entity's assets, liabilities and equity at a selected date.
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The primary purpose of a balance sheet is to display what an entity owns and owes (financial health).
Next Step: The Ultimate Bookkeeping & Accounting Course
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or
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Learning Accounting in 7 Minutes (free)
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Top 5 Bookkeeping Mistakes (free)
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Ready to take bookkeeping more seriously?
Take bookkeeping and accounting to the next level by enrolling in the Bookkeeping Master's Ultimate Bookkeeping Course
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Gain a certificate of completion
Learn bookkeeping and accounting for limited companies
Learn how to create year-end accounts
Learn advanced accounting principles