Models & Data Flow for folks on the GO!

Orienation > Models and Data flow for folks on the GO!

This is the accelerated way to learn about our systems and offerings. You are getting only the data models and flow charts with very little commentary. A lot can be conveyed given a picture is worth 1000 words.

The Sections Below include:
1) The Three Slice Pie Model - Model was the first model we used to develop our education and software. They convey ways to think about Accounting Systems generically and Hollistically.
2) The Six Box Model - This expands upon the Three Slice Pice Model. It helps delineate Managerial/Cost Accounting from Tax/Financial Accounting and it helps show people exactly where the "Bookkeeping" functionality is in a Holistic Accounting system. (near the bottom, because it's done in arrears)
3) The Simplicity List - A bulletted list which reminds you of the bigger picture. It identifies every small business person's basic needs in a generic way. If you read the top of this web page, you consumed it already. KISS. "Keep it Simple and Silly"
4) The "Intro to Bookkeping and Accounting via Invoices and Monthly Statements Flowchart" was created to help bring the Simplicity List and the 6 Box Model to life. Follow both paths twice, learning more with every pass. The distinction and clear separation between Managerial/Cost Accounting and Tax/Financial Accounting is the key takeaway. It takes 6 minutes to digest.
5) The BK Data Flow subdomain - a one page website that details the data flow for our Bookkeeping Template. Once you understand the health that separation between Managerial/Cost Accounting and Tax/Financial Accounting provides, this will become a valuable resource for understanding the data flow on the Tax/Financial Acocunting Side of the models.

Comments

The dividing line we draw initially between Managerial/Cost Accounting and Tax/Financial Accounting is based on an arbitrary rule in the US tax code related to a $5 Million/year revenue threshold. Above $5 Million in sales and you will find a minor shift in the dividing line we share initially. Learn it the way we've presented it. Once you have it down, we'll tell you the fibs we created to get you to the next level.
If you are only here for a Bookkeeping Solution and not a Sales System or other Mangerial/Cost Accounting Supplements, the "Intro to Accounting via Invoices and Monthly statements flowchart" is still your best first step for education. Even if you have a Sales System you want or need to stick with, consume our education as presented first just to make sure your foundations are well laid and then move on.
Our Bookkeeping Solution requires zero knowledge of debits and credits for initial use making it unlike any other commercial, double entry software solution in the marketplace. An opportunity to learn about them abounds for those who wish to do so, but as you will see, they are not required for any data entry. For fun, there is a switch you can use to turn Debits and Credits on and off on the backend for experiential education.
All FIVE of these tools can be found on the first page on the Orientation Menu. If nothing else, check that out before reaching for the free software templates.

1) The Three Slice Pie Model

This was the first model we developed for conversation.

It's an overly simplistic way to think about an accounting system.

The next image will show some possible flows through the model along with some vocabulary tied to each of the quadrants.

There are three possible flows through a Small Business Accounting system.

Flow #1 doesn't appear to touch accounting sub systems. That's an "all cash business", like small time drug dealing, for example.
Flow #2 includes partial contact with accounting systems. This results in partially auditable accounting records, but it would be impossible to paint a full financial picture from those records.
Flow #3 is always in contact with accounting sub systems in some way. This type of system is generally reconcilable in some form at all times.

2) The 6 Box Model

The 3 slice pie was good enough for those of us who knew what we were trying to talk about, but it did not provide enough resualtion to be a good teaching tool nor a good model for software development. When the 3 slice pie expanded into the 6 Box Model, we were able to also include a delineation between Manager/Cost Accounting and Tax/Financial Accounting and we were able to more succintly apply more vocubulary for each box. That made a HUGE DIFFERENCE for those trying to learn from our educational material.

1) Managerial Accounting, also referred to as Cost Accounting, is for yourself. Do it any way you'd like, but always remember that poop in is poop out.
2) Tax Accounting, also referred to as Financial Accounting is done for others. It needs to be done using Generally Accepted Accounting Principles (GAAP).
3) Bookkeeping and Accounting is only addition and subtraction with a little multiplication or division mixed in. It's not difficult. If you have an underlying belief that it is, now would be a great time to let that go.

3) The Simplicity List

Every Person in Small Business starts out with similar basic needs.

A simple "Customer Database" (be that "customer", "client", "patient", etc.)
A simple "Quoting" or "Price Presenation" System
A simple "Sales System" made up of one or more of the following:
- A "Before the Fact" Sales System
- An "In the Moment" Sales System
- An "After-the-Fact" Sales System
A simple "Bookkeeping System"
A simple "Website"

NOTEs: See home page for expanded version of this.

This list provides a holistic view of a small business. The Accounting Related Systems play a major role but they are not all inclusive. However, you can see the grouping of Managerial/Cost Accounting Systems at the top and the Bookkeeping near the bottom as is also found in the 6 Box Model.

4) Intro to Bookkeeping and Accounting via Invoices and Monthly Statements

For most, no matter the nature of your business, when learning or re-learning bookkeeeping it would be best to learn about sales systems and bookkeeping systems in the context of a Small Business that process invoices or monthly statements. A construction business or counseling business might be a great examples to start with. Once you have the processes and vocabulary down for these, you will be in a better position to have a conversation about your own business, which will have similar and different requirements which you can refer to in a relative way vs an absolute way for easier dialogue.

5) BK Data Flow

BK Data Flow subdomain is a resource that you do NOT need to consume now. We just wanted to make sure you know it exists.

It details the flow of data in our Bookkeeping template to show you exactly what it does, how it works and why your bookkeeping template need not be connected to your other systems.

https://bk-data-flow.zap-accounting-software.com/