ASS#Step4

Step 4

practising the recording process

Sharon Field - Q89038205 | ACCT110811 - Introductory to Financial

The chart of accounts organizes transactions into manageable sub-categories relevant to the activities useful for monitoring purposes. For example, I sell Nutrimetics cosmetics as a supplement to my income (but also because it’s a bit of fun and free stuff!!!), so I like to keep track of sales and orders. The sales being the revenue side and orders the expense. It’s not a big business and some months I may have no sales or orders, so I just use my personal bank account to collect monies and pay for orders. I also thought it’s good to keep entertainment expenses separate from living expenses as it’s a luxury and as such, I can forgo that expense to suit my income budget. Other suitable purposes for separate categories are donations for tax purposes, child care fees for checking rebates and insurance to make sure premiums have not sneakily changed. It’s also good to follow the ever changing use of mobile phones and internet charges. Better deals are constantly presented and I find as my knowledge grows with the use of technology, I need to be updating regularly. So, in some ways my chart of accounts is similar, yet so very different according to what I need. I’m sure as life changes, so will my personal chart of accounts.

In the example chart of accounts, I might change the way vehicle expenses is represented. My car is my biggest asset, I don’t own my own home or have huge investments, and it might be useful to keep all vehicle related expenses in the same category. Last year I bought a new car. The old car was more expensive to register, maintain repairs and used more fuel. I know this because I collected the data and made an informed decision to improve my vehicle expense. Of course, I factored in trading the car for public transport but with children and my busy lifestyle, it just wasn’t practical.

I am curious to understand what the percentages mean. I am happy with 19% income with my side business and coupled with part time working earns slightly more than government assistance. I hope to improve on that percentage when I gain more meaningful employment. Does the 80% mean that is how much of my income is spent on expenses? It makes me feel as though I’m living at a break-even point, something a profitable business might strive for. If I am more conscious of frivolous expenses can this percentage be improved? What does improving this percentage mean for my standard of living? This has definitely been an eye-opening experience. I find myself questioning how I spend my money and am I getting my money’s worth afterwards. I think it has been a useful exercise and I gained valuable experience using excel!!! I found little tips here and there!

This is the link to excel files:

https://onedrive.live.com/edit.aspx?cid=e4788879e22a3fd5&page=view&resid=E4788879E22A3FD5!273&parId=E4788879E22A3FD5!113&app=Excel