Etoro Social Trading moreover, a net Income Statement does not reflect cash payments for capital (like for the company’s building, property and equipment) but the free cash flow examples reflects these payments as long as these payments were (already) done in the form of cash.
JOURNAL: This is the diary of your business. It keeps track of business activities chronologically. Each business activity is recorded as a journal entry. The Double-Entry will list the debit account and the credit account for each transaction on the day that it occurred. In your reports menu in your accounting system, the journal entries are listed in the transaction register.
Suppose you want to buy a new truck with cash. But that purchase will empty the bank account and leave you without any cash for payroll! For cash flow reasons, you might choose to buy a truck on payments instead.
The easiest way you can use to keep track of your accounting is perhaps through cash receipts. This is less complicated and you can implement this easily for your business. Otherwise, you can practice another method known as accrual method. This is slightly confusing for some business owners as every sale that has been made will be recorded as “accounts receivable” regardless of payment being made or pending.