Can somebody help me with my bookkeeping question?

Question

i put up a business and registerd it to the BIR. its time for me to record my income and expenses. i would like to know if i should include my personal expenses like groceries, medicines, apartment rent,ect... in my books (journal/ledger)? whatever i earn from my business is what i use for my daily personal expenses.

Answer 1

If you're trying to keep records for your business, then you should omit personal expenses. Just record the business's income and the expenses it incurred in generating that income. Income minus expenses gives you the profit and this profit is yours and you don't have to record how you spent it.

Answer 2

Sorry to report that it is not ethical to include personal expenses in the accounting system of a business. You must keep your personal and business accounting systems separate.

Doing so violates a key accounting principle- the economic entity assumption, which states that your business is a separate economic entity. Because of this, accounting records for your business can only include expenses pertaining to your business.

If you give yourself a salary, it is a legitimate business expense that should be recorded in your accounting system.

Hope this helps.

Answer 3

Just put all the income in the business that you used personally as directors drawings (what you spent it on doesn't matter).