Few accounting questions

[Michelle2003]

Hi one quick question. How are expenses reflected on a balance sheet. For example say I pay a $6.00 monthly checkings accounts fee. Would that $6.00 appear under current liabilities? Thank you.

[Arlene M Passalacqua]

I would classify this in an expense account called 'bank fees' or some similar title. Very common expense.

Welcome to the Small Business Forums, don't forget to introduce yourself and your business.

[Michelle2003]

Thank you for answering my question. Well, to start my name is Justin Dormandy and am the co-owner of a small partnership, Dormandy and Neal Enterprises. Currently we are running small online e-commerce sites. Our first store is at www.store.yahoo.com/thehealthykitchen and the store deals in kitchen appliances for a healthy lifestyle. Thank you for welcoming to the community here.

[Vincent]

I would add that as an expense in the Profit and Loss Account. The total Net Profit will then be carried on to the Balance Sheet under the Financed By section.

It seems that everyone has their own methods of accounting, but this is the standard convention; at least in UK and better part of the world.

[Arlene M Passalacqua]

If you're using something like Quickbooks (which is the most popular account software in the USA), you should by default have an expense account for bank fees. Are you using Quickbooks, or another accounting software?

Nice looking ecommerce site you have there. How did you decide to use Yahoo? Do you believe they're worth it? I know that a lot of smaller companies offer similar services at a much lower pricing. I have always wondered if the exposure of being with Yahoo is worth the extra cost, maybe you can enlighten me? One thing I'd highly recommend is getting your own domain name. thehealthykitchen.com would sound better than store.yahoo.com/thehealthykitchen does Yahoo allow you to do that?

[Vincent]

Well, I believe that's the US standard way of accounting; but in UK (and Tally), we include it in the Profit + Loss account, and then carry the profit or loss on to the Balance Sheet.

US always like to have their own way.

[Michelle2003]

Thanks for the feedback on the site. I'll let you know soon how yahoo is and if they're worth it. I'll keep an eye out for how much traffic comes in from yahoo shopping too. We're pretty much on a shoe string budget right now but soon we'll be likely to get a domain name. Keep ya posted

Also, thanks for all the accounting info everyone...is quickbooks very difficult to use?

[Arlene M Passalacqua]

Ah, so you're just starting out with the Yahoo shop then. Yes, I would be curious to hear how things are going, later when you have something to say about it.

Quickbooks is IMO the easiest accounting software for a non-accounting professional to use. I've worked with about ten different competing software packages, and Quickbooks is by far my favorite to use when I'm working with someone who's not a CPA.

[1bad98gmc]

Well start with the income statement

Revenue
-Expenses
--------------
=Net Income

Then you use your net income calculation in your owners equity statement to calculate the owners equity

investments
+Net Income
-drawings
-----------------
=owners equity

balance sheet
assets=liabilities+owners equity

and thats how it ties in.

page 23 in the accounting book. lol

never leave home without your 1100 page accounting book

quickbooks probably does it the same but like peter said, it is most likely easier for non-accounting/business majors to know whats going on.

I use Excel for accounting.

[Dalen]

Quickbooks is great for small business. Very user friendly and easy for your accountant to translate into tax returns.

If you decide to go with a full blown website, look at 2Checkout.com for your payment processing.