March 28, 2008
Bookkeeping
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If you plan on starting a business, a basic knowledge of the accounting code guide is necessary in order to keep track of your transactions. Even if you are not a bookkeeper and you decide to hire a professional, the basic accounting knowledge is always a plus in the success of your business.
Accounting information is organized within the financial system of your company through the Chart of Accounts (COA). A list of all account names and numbers (cost elements) that appear in the company’s General Ledger is included in this document.
The COA is used to classify transactions as income, expenditure, assets, liabilities and equity. All financial transactions must be coded against an internal order (indicating ownership) and cost element (what the transaction represents), which provide the basis for budgeting, monitoring and reporting. The elements of the COA are:
FUND
This is a 6 character code which basically describes to source of funding in a transaction. Generally, the first 5 digits represent the office of the president fund number, while the final digit is used to establish sub-funds for further breakdown.
ORGANIZATION
It is also a 6 digit code, which represents the department of a company.
ACCOUNT
It is a six character code which represents the basic accounts classification. There are 7 different account types, and these are: assets, liability, system control, fund balance, revenue, expenditure and transfer.
PROGRAM
Yet another six character code, it represents the functions of the respective company.
ACTIVITY
This is designed for future use.
LOCATION
It is a six character code, and it is used for identifying assets from transactions.
INDEX
This one is a seven character code and it represents FOPAL (fund, organization, program, activity and location). The first three characters of the index are letters and they represent the name of the organization. The last four identify the FOPAL combinations.
This is a simple and basic walkthrough in the world of the accounting code guide. A professional bookkeeper is much more than that though, and if you consider an accounting career, you should know that it’s a work that requires a lot of patience, but it can pay off in the end.
You should also consider purchasing accounting software (although you can also get it for free) if you are serious about your company. The choice is yours, and it really depends on the size of your organization also. Most of the business owners leave the accounting stuff to specialized people, who are able to process all the information correctly, people who have a good knowledge of the accounting code guide.
Essential accounting code guide
Accounting code guide.
http://www.accountingcodeguide.com
Great accounting software resource
Accounting software.
http://www.accountingsoftwarefaq.com
March 26, 2008
Bookkeeping
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When you live in Never Never Land, aren’t things supposed to be fun? According to Michael Jackson’s latest financial woes the answer is no. Earning large amounts of money since he was five, how can Michael Jackson have a fiscal fiasco?
It boils down to spending versus watching the bottom line. Although Jackson’s bottom line included 50% ownership in The Beatles Catalogue, a stake in the Elvis Presley and Bob Dylan Catalogues estimated to be worth
March 26, 2008
Bookkeeping
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When you confirm that the balance in your checkbook is in sync with your corresponding bank statement, it is known as account reconciliation.
Any record that you keep regarding your financial transactions with banks, credit card companies, or retail stores is known as an account. It is an arrangement between buyers and sellers in which payments are to be made in the future. The different forms of payment are checks, bills of exchange, and promissory notes. These are transferable, signed documents, which guarantee to pay the bearer a sum of money at a later date.
Purposes of Account Reconciliation
Account reconciliation makes available a suitable method for reconciling the accounts to the monthly financial reports produced by the Financial Records System (FRS). Account reconciliation helps you evaluate departmental account records in regards to the reports, which have been generated by the FRS. This helps you to better verify the accuracy of each account statement. The person in charge of each account should verify the account every month. Account reconciliation helps ensure accurate reports on the account. It helps to identify errors and inconsistencies in your accounting.
In order to perform the reconciliation most efficiently, you should be certain that the person in charge of an account maintains full and accurate records. It is your choice to maintain the records in a manual filing system or on a computer program. You can develop your own filing and record keeping system. It should be capable of providing an effective means of reconciling your accounts on a monthly basis. You can make use of the following files to make the reconciliation process easier.
Open Transaction Files: These files hold all source documents that you may have started for the account, but have not yet processed. Some common types of source documents are Distribution of Deposit forms (for cash receipts), Check Requests, Purchase Orders, Prepaid Purchase Orders, Interdepartmental Billing Forms, Merchandise Orders, and Travel Authorizations.
Pending Files: These files hold source documents that had some activities posted on the FRS report, but await further activities before they can be completed. These include Purchase Orders, Inter-departmental Billing Forms, Travel Authorizations and Travel Expense Reports.
Closed Transaction Files: These files hold the source documents that are fully processed in the FRS. You can always refer to the Records Retention Policy to establish how long documents must be maintained on file.
Monthly Reports: You receive these after the end of each month. The accounts must be reconciled to the monthly reports. The FBM090, Account Statement, and the FBM091 and Report of Transactions can be handed over to the person handling each account. You then compare the open transaction and pending files to the FBM091 and the Report of Transactions, which has a detailed list of transactions posted in a particular month. Make a comparison of the source documents with the report to find out if the encumbrance was properly established, adjusted, or canceled in the correct account and the correct object code.
Additional Help
Software is available to help you in reconciling your accounts in an automated fashion. Apart from providing you with all the help, they are reasonably priced as well.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
March 26, 2008
Bookkeeping
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If you operate your own home business, then you are probably aware that there a few drawbacks to being self-employed, just as there are a few drawbacks to any major decision you do in your life.
Being an entrepreneur and self employed often means that you lose some workplace benefits, such as group insurance, sick leave, paid vacations, etc. However, the government does provide solace balance to those who have an entrepreneurial spirit, and this solace comes in the form of tax breaks, because you the home worker small business owner, are the largest source of employment in America.
There are many possible tax deductions for home businesses; you simply have to be well-informed about them to make use of them.
There are good reasons for you to go through the trouble? Because you
March 26, 2008
Bookkeeping
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Bookkeeping is fundamental in running your business in an informed way. It is important that you have an organized, transparent and updated bookkeeping system in place. One of the ways to keep track of your company’s books is bank reconciliation.
What is bank reconciliation?
The procedure of comparing the account balance given by the bank with that of the company’s book of accounts and explaining any discrepancy is bank reconciliation. The discrepancy in the balances may be due to the different timing of registering the data in the bank’s books and in your company’s books. This discrepancy is normal and is rectified automatically within small time. However, sometimes the discrepancy is due to an error, which has to be rectified manually and to catch this error you need bank reconciliation. Companies generally do bank reconciliation at the end of each month.
Reasons for maintaining bank reconciliation
Regular monthly bank reconciliation keeps your company’s financial records clear and updated. You never build up an erroneous backlog. Also, you can understand your accounting status all the time. It is important that you have a prompt and reliable communication system with the bank so that you keep your records accurate.
Bank Reconciliation Statement
It is better to prepare a bank reconciliation statement by yourself so that you are able to figure out the causes of discrepancy.
Structure: The statement is divided into two sections. The right section reflects your bookkeeping for bank transactions and the left side reflects the bank’s records for your account with them.
Heading: The heading of the statement will have the bank’s complete name with the date of reconciliation.
Items: The first item of the statement is your opening balance just before the reconciliation. Check each item of the statement further for the following. If the transaction is missing from you our company’s account and it is on the bank’s record then you need to enter it in your books. If the bank section has missed it then enter it under their section. If the missing transaction belongs to the bank such as any fees deductions or interest credits, then it is an error at the bank’s end and it will rectify the error.
Adjustments: Once the reasons for the discrepancy have been figured out then you should include the missing information in journal entries.
Items of Bank’s Statement
Credit: Banks may credit some interest periodically into your account as applicable on the account balance.
Debit: These will be any of the bank charges on your account as applicable.
Erroneous credit: Any incorrectly placed credit in your account is booked under this head. Sometimes, the bank makes a deposit in the wrong account.
Items on Your Account Books
Unpresented check: Your Company’s books should record any checks issue immediately at the time of issue. The bank will, however, record it when the check is presented to it.
Software for bank reconciliation
There is a lot of bank reconciliation software readily available in the market. This software is compatible with all the latest accounting packages. The data is automatically imported, checked and reported through the software making your job easier.
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com