Beginner’s Guide To Understanding Excel Accounting

Beginner's Guide To Understanding Excel Accounting

Microsoft Excel is not a new software. It has been around for years. Although several alternatives to Excel are available in the marketplace, MS Excel continues to be a preferred option for creating spreadsheets.

Spreadsheets are an excellent way of maintaining essential records, organizing your data, and bookkeeping. This is why the software is widely used by students, teachers, business owners, and accountants. Unfortunately, MS Excel is only native to Windows, and Mac users will have to look for alternatives. One of the best alternatives to MS Excel for Apple users is Numbers. If you need to collaborate with people who use Excel, you must learn how to convert Numbers file to Excel. To convert, open Number > go to File > click Export To > Excel.

In this article, the focus is on how you can use Excel for accounting. Follow this guide to get started.

Track Your Invoices

If your business deals with invoices, you must create a separate tab for invoices. This will help you in tracking the invoices. You can create a column with the invoice number, or you can use any other form of reference.

You must include the data on the invoice, including the date when you received the payment. It would be best if you also created a column describing the invoice and the amount paid.

Place the invoice tab next to the transactions tab to make it easier for you to track.

Create a Bookkeeping Template

You can create a bookkeeping template to save yourself from having to start from scratch. First, however, you must save the template so you can use it in the future and quickly start recording your transactions.

If you do not want to create a bookkeeping template from scratch, you can search online and download readymade templates. Typically, the template must include different features like an Accounts Receivable tab, Accounts Payable tab, other expenses, etc.

The primary section of an accounting or bookkeeping template must be the chart of accounts, the income statement, and the list of transactions.

Also, ensure the template can be easily customized and edited to suit your specific needs.

Add the Transactions

After you have created or downloaded a bookkeeping template, you are ready to start. You can start by adding transactions to the spreadsheet. But first, you must familiarize yourself with the fundamental mathematical functions in Excel to speed up the process of bookkeeping.

When you are adding transactions, ensure you type the exact amount. The transactions must include the money coming in and the money going out.

Whenever your business sends or receives a payment, you must record it in the following ways:

  • The date of the transactions
  • Ensure to enter the amount in full, and you must add a minus sign if this was a payment that you have sent
  • Select the category of the payment or transactions
  • Include a short description of the transaction

If the cash flow tab is created to collect data from the transactions tab, you are going to see a visual representation of the cash flow. This will automatically get updated.

Create a Tab For Cash Flow

In the spreadsheet, you must create a tab for recording cash flow. You can quickly do this by downloading a template from the web. Or, you can create one from scratch.

In the cash flow tab, you will be displaying how much money your business or company has. The calculation will be based on the income received and the income that is sent out of the account.

Also, you can create a second cash flow tab which will show a chart of your business’s cash flow. The tab will even show a visual representation of all the income your business has received, and there will be a separate visual representation of the money that is spent or paid out.

Create a Visual Representation of Your Data

To get a clear picture of your earnings and expenses, you must compare the transactions and earnings. You can do this by arranging the data side by side and looking at each of the tabs to see how your company is faring over a period of time. However, this might not be enough, and it would be better to add a visual representation.

For this, you can add a Sparkline Chart in an empty cell, which will be placed next to your compared data. First, choose the range of data and go to the Insert menu. Then, select the line chart option to create a visual representation of the loss or growth of your numerical data.


Take your Excel accounting skills to the next level by mastering the above mentioned hacks. In addition, it would be best to continue learning new Excel tricks to stay in the game and make accounting easier for your staff.

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About the Author: jessica

Jessica isn't the biggest fan of winter, but she's doing her best to embrace the cold weather and snow. You can find me trying out new chill recipes, playing squash & listening to music.

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