Understanding Business Accounting For Dummies, 2nd Edition (135 page)

straight-line depreciation:
Spreading the cost of a fixed asset in equal amounts of depreciation expense to each year of its useful life. Depreciation is the same amount every year by this method.

true and fair:
The auditors' confirmation that the
balance sheet and income statement show a ‘true and fair' view of the business, in accordance with generally accepted accounting principles.

variable expenses (costs):
Any expense or cost that is sensitive to changes in sales volume or sales revenue.

venture capital:
Professionally managed funds that buy stakes, usually in private companies, to help them realise their growth potential.

window dressing:
Accounting devices that make the short-term liquidity and solvency of a business look better than it really is.

working capital:
The difference between current assets and current liabilities.

Z-Score:
An algorithm that uses various financial ratios to arrive at a figure below which firms have a high chance of failure.

Appendix B
:
Accounting Software

T
he following list gives you some general pointers for narrowing down your choices when deciding which accounting software package is right for your business:

Get your bookkeepers and accountants involved in the selection process early on.

Make a list of the features that you need.

Get a software recommendation from your business friends and associates who are already using an accounting program (or have your accountant talk with their accountants).

Think about how simple or difficult the program is to set up.

Popular Accounting Programs

Here's a list of several popular small business accounting programs (for Windows 98 and beyond operating systems) to get you started on your search for the best program for you. We include the names of the software companies, followed by their Web site addresses. (Some of these accounting programs are available in Macintosh versions, but you have to check.) The street prices of these software packages are generally under £200.

Money 2007,
www.microsoft.co.uk

The Deluxe edition of Microsoft's
Money 2007
includes tools for managing your personal finances and keeping track of business accounts within the same product. It is really only suitable for sole traders and small partnerships. It does support trading in euros as a standard feature. In general, it uses little in the way of specialist accounting terms but there's a good range of online help to support you through tasks. The product includes a selection of accounting reports. These cover essential analyses such as Profit and Loss and VAT summaries. Money's Spending Tracker automatically categorises your transactions and compares them to your budget. However, there's little in the way of drill-down facilities to view data behind the high level figures.

Microsoft Money is an inexpensive product, between £15 and £20 depending on the version you buy, and there's no yearly support cost.

MYOB,
www.myob.co.uk

MYOB's
setup includes a series of five wizards that let you configure the way the system operates and create accounts tailored to a specific business type. Although getting started is straightforward, it relies on accounting terms to describe processes, such as creating an invoice, and supplements these with confusing vocabulary of its own. Customer and supplier contact details are stored in a Card File that contains features such as an Identifiers list which can be useful, as it provides a means of creating customer groups.

This software also divides customers' accounts into lower-level jobs, which is particularly useful for service-based industries. In terms of analysis, there are some drill-down tools within the program's reporting screens and you can export data to Microsoft Excel from within the package for more in-depth analysis.

This product is an all-round small-business tool, which includes payroll and stock control capabilities as standard. MYOB BusinessBasics, with a one-year Telephone Support Plan, costs £159.74 including VAT.

TAS Books,
www.tassoftware.co.uk

TAS offer a range of products together with online support within the product and manuals that help to explain the more advanced features.

Businesses that need to track IR35 payments can specify whether they want to track IR35 in general, as well as determine if each invoice posted will be subject to the tax. Taxation support is generally good within the product and there are some useful tools for creating a VAT 100 report from your accounting data. Prices range from £109 up to £499.

QuickBooks 2008,
www.intuit.co.uk/quickbooks/

The reporting tool within QuickBooks 2008 includes features for batch printing one-click reports on sales and expense, stock tracking, and advanced tools for sales and expense forecasting.

It also handles all major currencies including the € and it is possible to store item prices in two different currencies. This is beneficial if you need to display consistent prices in an additional currency, rather than fluctuating costs based on variable conversion rates. The product also takes account of VAT codes for EC businesses. The system allows you to prepare multiple estimates for a single job, to track time, expenses, and create sales orders. It can integrate with
Microsoft Office
and can grow with your business by adding an integrated payroll.

The basic version costs £49.95, VAT included, and the Premier version costs £449.95, VAT included.

Instant Accounting,
www.sage.co.uk

At £149 including VAT, Sage's entry product
Sage Start-up
bears reasonable comparison with some of the other products on the market. It's one of the more basic packages available, offering none of the features, such as multiple currency support, available elsewhere.

Easy to set up, the program is tailored to meet the needs of businesses selling goods at set unit prices. For companies offering more consultancy-based services, the product isn't sufficiently flexible to support varying price levels or more unusual one-off charges that can be associated with service businesses. Sterling is the only currency supported by the product and there's no ability to track current tax charges, such as IR35.

Instant Accounting
is the ideal single-user program for a start-up business or a company with very basic accounting processes and top-line reporting requirements. The Sage range goes from Start-up to 50, 200, and up to Sage 1000 - a suite of programs that integrate the software run by different departments within an organisation.

Other Accounting Software Systems

These are some other bookkeeping and accounting systems designed for particular industry sectors or purposes.

A21,
www.a21.net
:
A business accounting solution, e-commerce enabled, designed for small and medium enterprises.

Banana Accounting for European Companies,
www.banana.ch
:
A double-entry accounting program for European small businesses, associations, and financial companies, which costs €79. Banana is a Czech firm.

Business Management System for Book Publishers,
www.acumenbook.com
:
Business management software, including royalty accounting and job costing, designed specifically for book publishers.