Basic Accounting for the Small Business: Simple, Foolproof Techniques for Keeping Your Books Straight and Staying Out of Trouble

Michael Iscove was a senior partner in the accounting firm Iscove, Gold & Glatt in Toronto.

Clive Cornish was a senior partner in a public accounting firm. His book outlines many of the basic elements of bookkeeping for a small business including samples of page layouts for many of the accounting journals. The major problem with the book is that it was written 16 years ago and many accounting-based concepts and tax principles have changed. For example, in the section on purchasing a business, Cornish tells his readers never to buy the shares of a company because of the attached risk of purchasing someone else’s debts. I agree with his assessment of the risk. However, there is a new $500,000 capital gains exemption on the sale of the shares of certain qualifying small businesses, so that the key now is to reduce the risk rather than avoid it.

The author’s reflections on when to use your accountant are also somewhat outdated. The profession has moved beyond bean counting and tax advice into the business arena and it is important that anyone going into business today consult with professionals before the fact and not after. The author seems to take the approach that you only see your advisors to have your numbers calculated once the year is over. This type of scenario creates tremendous problems for lawyers and accountants as they are faced with reacting to the completed transaction instead of assisting in planning for it. Accounting advice may help to structure a purchase or sale which is highly advantageous to everyone concerned. I would have preferred to see a chapter which outlined what professional advisors do and how to select one as well as when to use them.

As far as straightforward accounting information goes, the author has laid out how to record sales, accounts receivable, cash receipts, cash disbursements, accounts payable, and general ledger. All of these journals are fairly well laid out and adequately explained given the limitations of the book and the audience it is targeted to. Again, if the book were current, it would undoubtedly have addressed the use of micro-computers to perform many of these functions.

Overall, this book provides an acceptable level of bookkeeping knowledge, but most of the other information is many years out of date.