• Accounting procedures and formats for micro and small enterprises

  • Manual Cashbook format

  • Electronic Cashbook on Excel basis

  • Electronic Cashbook with accounts (Excel)

  • Records for maintenance services

  • Receipt format

  • Sales on credit

  • Raw material inventory

  • Profit and Loss Statement (manual and electronic)

  • Cash Flow Statement

• Professional accounting for small and medium enterprises

  • Accounting software and software providers

  • Bookkeeping and accounting training courses

• Formats for Download

Introduction  [ top]

Advice in accounting and bookkeeping for medium and large enterprises should be done by professionals. Most micro and small enterprise operators do not need a complex accounting system but a rather simple introduction to a cash book and introduction to how to produce and keep records in the form of receipts. Micro and Small Enterprises (MSEs) often face problems with regard to recording their daily transactions. This is due to the fact that most of the operators do not know how to make such records in a simple and easy manner. As a result, many operators find it very difficult to give information on their income and expenses and eventually do not know whether they have lost or profited from their business activities. The absence of recording has also caused some problems in handling customer needs, particularly in maintenance services and also in cases of sales on credit services. The lack of recording also makes it very difficult for the tax offices to levy reasonable taxes that are commensurate with the business activities. As a result, business operators complain on the taxes that are levied on them on the basis of estimation, which they say are too heavy to bear.
 

 
Accounting procedures 
and formats for micro and small enterprises  [ top]

Micro and Small Enterprises (MSEs) often face problems with regard to recording their daily transactions. This is due to the fact that most of the operators do not know how to make such records in a simple and easy manner. As a result, many operators find it very difficult to tell their incomes and expenses and eventually don’t know whether they have lost or profited from their business activities.

The absence of recording has also caused some problems in handling customer needs, particularly in maintenance services and also to provide sales on credit services. 

The lack of recording also makes it very difficult for the tax offices to levy reasonable taxes that are commensurate with the business activities. As a result, operators are complaining on the taxes that are being levied on the basis of estimation, which they say are too heavy to bear.

Cashbook format  [ top]
The cashbook is very important to show the situation of the business at any moment in time, as it provides both the charges and credits for a any given period. The balance column is the difference between the charges and credits columns.

Electronic cashbook  [ top]

For small and medium enterprises with electronic facilities, an effective but simple system is that on an Excel sheet. The following cashbook for download has the same structure as the cash book above but adds up automatically.
cashbook-1.xls (take the right mouse button for download)

Electronic cashbook with accounts  [ top]

The electronic cashbook with accounts includes several columns for accounts as charges for equipment, personnel, sales etc. By recording the cashbook journal, the accounts are calculated automatically. cashbook-2.xls (take the right mouse button for download)

 

Electronic cashbook with accounts
No.	Date	Acc	Description	Cash in	Cash out	Balance
1	2.2.04	10	Initial cash in	2 345.00		2 345.00
2	3.2.	51	Electricity		126.50	2 218.50
3	3.2.	52	Shop rent		930.40	1 288.10
4	4.2.	10	Sales of products	455.70		1 743.80
5	5.2.	53	Taxes		780.90	962.90
6	5.2.	10	Sales of products	1 675.80		2 638.70
7	5.2.	61	Raw materials		1 675.80	962.90
8	7.2.	10	Sales of products	780.45		1 743.35
9	8.2.	61	Raw materials		345.70	1 397.65
10	9.2.	51	Water		125.60	1 272.05
Sum / Balance				5 256.95	3 984.90	1 272.05

E.g. all entries with the account number 61 may automatically be filtered and added (see cashbook-2.xls on the web page).

Records for maintenance services  [ top]

This format helps to record items that are brought to the operator for maintenance purposes.  As the format has columns for date the items are received, name of client, type of item and the date on which the maintained item is submitted to the customer, it helps to organize the operator and provide efficient service.  This format helps to avoid problems of messing the items and keeping appointment dates for delivery of the items.

Records on maintenance services
No.	Date item received	Name of client	Type of item received	Estimated fee to be paid	Date of submission	Signature

Receipt format  [ top]

Sales on credit  [ top]

The format is intended for recording all credit sales so that the operator is reminded of the remaining cash to be collected from customers who took credit service.  As the format provides for identification of the customer, the date on which sales on credit is effected, the amount of cash remained to be paid and the date on which it is to be paid back, it helps the operator to clearly account for his/her income.  This format also helps to identify those who default and those who pay back on time for taking the necessary measures in extending credit sales in the future.

Sales on credit
No.	Date	Name and Address of client	Product / Service	Unit value	Advance paid	Remained to be paid	Date final payment	Signature

Format for raw material inventory  [ top]

This format helps to have record of inventory of raw materials in order to account for raw material used in the calculation of expenses.  Thus, the operator deducts the quantity of raw material used from the column of raw material purchased and maintains the inventory both in terms of quantity and value.  This helps the operator to identify the amount of raw materials used during a given period of time, and the amount of inventory he has and helps to make proper calculation for expenses incurred.

Raw material inventory
No.	Date	Raw material purchased			Raw material used			Inventory
		Type	Qty	Total  value	Type	Qty	Total value	Qty	Total value

Profit and Loss Statement  [ top]

The Profit and Loss Statement is the final accounting procedure to be presented to the taxation authorities, in order to be taxed on the real activity and not on estimation basis.

Go to explanation to the Profit and Loss Statement

Company
Profit and Loss Statement Period: from...............  to....................
Gross Sales
Less: Returns and allowances	-
= Net Sales	=
Less: - Costs of goods sold	-
- Direct material	-
- Direct labour	-
- Factory overhead	-
= Gross Profit	=
Less: - Administrative and selling expenses	-
- Salaries	-
- Telephone	-
- Water	-
- Electricity	-
- Rentals	-
- Others	-
= Operating Profit	=
Less: - Interest expense	-
= Net Profit before Tax	=
Less: - estimated Income Tax	-
= Net Profit after Tax	=
Date Signature	Help/ Explanation

Cash Flow Statement  [ top]

Introduction

Cash in business can be compared to water that flows in a river. Cash flows in from sales, loans, and equity. In the process of producing goods and services, cash flows out to pay for materi­als, salaries (including the entrepreneur's), rent, electricity, water, interest, supply, transport.

If there is more water coming out than coming in to the river, then it will soon dry out. Similarly, businesses having more cash outflows than cash inflows will soon get into trouble. They will not be able to pay for their expenses as they fall due - a difficult situation that every prospective entrepreneur should avoid. Hence, cash flow planning is an important issue to be considered by the operator. However, many entrepreneurs fail to realise this. They constantly run the risk of being un­able to settle most of their bills. Poor cash planning practice is a major cause of many small business failures.
 

The cash planning process begins with figuring out how much cash is generated from sales receipts as well as other sources like loans, etc. for a certain time period. This figure represents cash inflows. Obviously, credit sales are excluded since they are not cash until they are fully paid for. Then, figure out how much cash is needed to pay all expenses for materials, rent, salaries, and others. This figure represents cash outflows. Credit purchases are excluded since they are not cash transactions until they are fully paid for.

The difference between cash inflows and cash outflows represents the ending cash balance. This cash balance within a period, say for a month, will automatically be­come the beginning balance for the next month.

Preparing cash flow projection consists of cash inflows (or cash receipts) and cash outflows (or cash payments). Likewise, it will have spaces for be­ginning and ending cash balance. The aim is to ensure that the available cash will be sufficient to meet the needs and obligations of the proposed business. If there are more cash outflows than inflows in the cash flow projection, then measures such as selling more products, con­verting personal assets to cash or borrowing some money must be considered to avoid this situation.

Definitions of Terms used in Cash Management

• Cash inflows: all cash receipts realised within a given period.

• Cash sales: cash revenues realised from sales of finished goods/services.

• Credit sales: sales made without receiving cash.

• Depreciation: a cost charged against fixed assets for their replacement.

• Cash outflows: total of all cash payments.

Professional accounting for small and medium enterprises [ top]

For small and medium enterprises professional accounting is needed in order to comply with accounting standards acceptable by the tax authority. Thus, the list of adapted softwares, providers and training institutions are provided below for your reference.

Accounting Software and Software Providers [ top]

CyberSys Technology

Befekadu building, Bole road, opposite to Saay Pastry

e-mail: cybersys@telecom.net.et 

Software:   - Peachtree Accounting, Original 300 Birr

                 - Quick Book, ask for price

                 - Dac, ask for price

PRO - TECH

P.O.Box 1612 Addis Ababa, Tel. 620425, 620729, Fax 620840

Software: - Peachtree Accounting

Bookkeeping and accounting training courses  [ top]

CyberSys
Befekadu building, Bole road, opposite to Saay Pastry
P.O.Box 19674 Addis Ababa

e-mail: cybersys@telecom.net.et 

Courses provided:

Peachtree accounting, 40 Hrs, 700 Birr Quick book accounting, 28 Hrs, 700 Birr Dac accounting, 28 Hrs, 700 Birr Webpagedesign, Frontpage, 20 Hrs, 600 Birr Other trainings

African Lakes
Near the National Stadium, P.O.Box 3533 Addis Ababa, Tel. 518444

City Business Computers
Bole Road, in front of Bole Printing Enterprise, P.O.Box 6052 Addis Ababa
Tel. 51.71.97, 51.33.65, 53.37.30, Fax 251-1-52.27.56
email: cbc@telecom.net.et, 

Formats for Download  [ top]
To download these documents on your PC, click with the right mouse button on the link of your interest and then choose the menu "save target as...".

Formats	KB
Cash Book (simple manual) cashbook.doc	37
Cash Book (electronic Excel sheet)  cashbook-1.xls	20
Cash Book (electronic Excel sheet with accounts) cashbook-2.xls	25
Records of maintenance services maintenance.doc	63
Receipt format receipt.doc	36
Sales on credit sales-on-credit.doc	66
Raw material inventory raw material inventory.doc	58
Profit + Loss Statement profit-loss-statement.doc	23

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