Accounting Tools

JUNE 7, 2023

Related Courses Bookkeeper Education Bundle Bookkeeping Guidebook What is an Account? An account can have several meanings in the accounting profession. Account Record An account can be the record in a system of accounting in which a business records debits and credits as evidence of accounting transactions.

General Ledger 75

General Ledger Accounting Accounting Accruals 75

Accounting Tools

JULY 13, 2023

Related Courses Accountants' Guidebook Bookkeeper Education Bundle Bookkeeping Guidebook What is an Accrual? An accrual allows a business to record expenses and revenues for which it expects to expend cash or receive cash, respectively, in a future period. It is an essential element of the accrual basis of accounting.

Accruals 40

Accruals Financial Statements Bookkeeping Billing 40

Accounting Tools

DECEMBER 20, 2023

What is an Accounting Entry? An accounting entry is a formal record that documents a transaction. In most cases, an accounting entry is made using the double entry bookkeeping system , which requires one to make both a debit and credit entry, and which eventually leads to the creation of a complete set of financial statements.

Accounting 75

Accounting Accounting Accruals General Ledger 75

Accounting Tools

MARCH 11, 2024

What is an Accrual Rate in Finance? Accrual rate is the percentage interest rate applied to the remaining principal on a loan. What is an Accrual Rate in Human Resources? The accrual rate term is also used in human resources, where it is applied to the calculation of accrued vacation time.

Accruals 40

Accruals Accounting Accounting 40

Accounting Tools

JUNE 12, 2023

Related Courses Accountants’ Guidebook Bookkeeper Education Bundle Bookkeeping Guidebook What is the Accrual Basis? Accrual basis is a method of recording accounting transactions for revenue when earned and expenses when incurred. The alternative method for recording accounting transactions is the cash basis.

Accruals 40

Accruals Financial Statements Bookkeeping Invoicing 40

Accounting Tools

JUNE 9, 2024

What is an Over Accrual? An over accrual is a situation where the estimate for an accrual journal entry is too high. This estimate may apply to an accrual of revenue or expense. Thus: If there is an over accrual of $500 of revenue in January, then revenue will be too low by $500 in February.

Accruals 40

Accruals Accounts Payable Accounts Payable Billing 40

Accounting Tools

MARCH 31, 2023

Related Courses Bookkeeping Guidebook Closing the Books The Year-End Close What is an Under Accrual? An under accrual is a situation in which the estimated amount of an accrual journal entry is too low. This scenario can arise for an accrual of either revenue or expense.

Accruals 40

Accruals Financial Statements Accounts Payable Accounts Payable 40

Accounting Tools

SEPTEMBER 22, 2023

Related Courses How to Audit Payroll Optimal Accounting for Payroll Payroll Management What is a Wage Accrual? It is quite common to have some amount of unpaid wages at the end of an accounting period , so you should accrue this expense (if it is material).

Accruals 40

Accruals Payroll Auditing Tax 40

Accounting Tools

SEPTEMBER 22, 2023

Related Courses Bookkeeping Guidebook Human Resources Guidebook Payroll Management Accounting for a Bonus Accrual A bonus expense should be accrued whenever there is an expectation that the financial or operational performance of a company at least equals the performance levels required in any active bonus plans.

Accruals 40

Accruals Payroll Tax Bookkeeping 40

Accounting Tools

NOVEMBER 5, 2023

Related Courses Bankruptcy Tax Guide Essentials of Corporate Bankruptcy What is the Liquidation Basis of Accounting? Liquidation basis accounting is concerned with preparing the financial statements of a business in a different way if its liquidation is considered to be imminent. Forced liquidation.

Accruals 71

Accruals Accounting Accounting Financial Statements 71

Accounting Tools

MAY 15, 2023

Related Courses Bookkeeping Guidebook How to Audit Receivables New Controller Guidebook What is the Allowance for Doubtful Accounts? The allowance for doubtful accounts is paired with and offsets accounts receivable. It represents management’s best estimate of the amount of accounts receivable that will not be paid by customers.

Account Receivables 75

Account Receivables Accounts Receivable Accounts Receivable Accounting 75

Accounting Tools

MAY 24, 2023

By using a soft close, the accounting department can issue financial statements very quickly and then return to its normal day-to-day activities. Or, they may have more variable results from month to month because accruals are not being used to smooth out reported results over multiple reporting periods.

Accruals 75

Accruals Financial Statements Account Reconciliation Auditing 75

Future Firm

JULY 21, 2022

Does your firm use an accounting engagement letter when signing on a new client? In this article, you’re going to learn about: What an accounting engagement letter for your firm is. Accounting Engagement Letter: What Is It? Here is an example section for an Accrual Bookkeeping Service. Bookkeeping Services (Accrual).

Accounting 98

Accounting Accounting Accruals Bookkeeping 98

Accounting Tools

MAY 24, 2023

Related Courses Closing the Books The Year-End Close The Soft Close What is an Accrual-Type Adjusting Entry? An accrual-type adjusting entry is a journal entry recorded at the end of a reporting period that alters the amount of revenues or expenses recorded in the income statement.

Accruals 40

Accruals Invoicing Accounting Accounting 40

Accounting Tools

DECEMBER 23, 2023

An alternative definition is that an expense is the reduction in value of an asset as it is used to generate revenue. Under the accrual basis of accounting , an expense is recorded as noted above, when there is a reduction in the value of an asset, irrespective of any related cash outflow. What is an Expense?

Accruals 75

Accruals Bookkeeping Accounts Payable Accounts Payable 75

Accounting Tools

APRIL 21, 2023

Thus, it is formulated under the guidelines of cash basis accounting (which is not compliant with GAAP or IFRS ). Auditors will not certify an income statement prepared under the cash basis of accounting; the statement must be converted to the accrual basis before a certification will be issued.

Accruals 75

Accruals Deposits Billing Invoicing 75

Accounting Tools

AUGUST 6, 2023

Related Courses Accountants’ Guidebook Bookkeeper Education Bundle Bookkeeping Guidebook What is the Dual Aspect Concept? The dual aspect concept states that every business transaction requires recordation in two different accounts. The offset to the entry increases the accounts payable liability in the balance sheet.

Accruals 75

Accruals Financial Statements Bookkeeping Accounts Payable 75

Accounting Tools

OCTOBER 4, 2023

If an entity is recording its business transactions under the accrual basis of accounting , it is quite possible that the profitability condition will not be matched by the cash flows generated by the organization, since some accrual-basis transactions (such as depreciation ) do not involve cash flows.

Accruals 75

Accruals Financial Statements Tax Accounting 75

Accounting Tools

JUNE 11, 2023

Related Courses Accountants' Guidebook Bookkeeper Education Bundle Bookkeeping Guidebook What are Accrued Expenses? The journal entry is normally created as an automatically reversing entry , so that the accounting software automatically creates an offsetting entry as of the beginning of the following month.

Accruals 75

Accruals Accounts Payable Accounts Payable Invoicing 75

Accounting Tools

AUGUST 6, 2023

Year-end adjustments are journal entries made to various general ledger accounts at the end of the fiscal year , to create a set of books that is in compliance with the applicable accounting framework. Accrual of payroll expenses for hours worked that have not yet been paid. Depreciation and amortization charges on fixed assets.

General Ledger 75

General Ledger Accruals Billing Auditing 75

Accounting Tools

SEPTEMBER 11, 2023

Related Courses Accountants’ Guidebook Bookkeeper Education Bundle Bookkeeping Guidebook What is a Transaction? A transaction is a business event that has a monetary impact on an entity's financial statements , and is recorded as an entry in its accounting records.

General Ledger 75

General Ledger Accruals Financial Statements Bookkeeping 75

Accounting Tools

JULY 8, 2023

Related Courses Optimal Accounting for Payables Payables Management How is a Voucher Used in Accounting? If vouchers are used for all payables , their totals can be aggregated to determine the total amount of accounts payable outstanding. A voucher is created following the receipt of an invoice from a supplier.

Accounts Payable 75

Accounts Payable Accounts Payable Purchase Order Accruals 75

Accounting Tools

JANUARY 26, 2024

This is one of the most essential concepts in accrual basis accounting , since it mandates that the entire effect of a transaction be recorded within the same reporting period. Accounting for the Matching Principle Recording items under the matching principle typically requires the use of an accrual entry. In short, no.

Accruals 75

Accruals Bookkeeping Financial Statements Invoicing 75

Accounting Tools

MAY 21, 2023

Related Courses Accountants’ Guidebook Bookkeeper Education Bundle Bookkeeping Guidebook What is a Journal Entry? A journal entry is used to record a business transaction in the accounting records of a business. For example, when you generate a sale for cash, this increases both the revenue account and the cash account.

General Ledger 75

General Ledger Financial Statements Accruals Payroll 75

Accounting Tools

OCTOBER 28, 2023

Related Courses Bookkeeper Education Bundle Bookkeeping Guidebook What is a Valuation Account? A valuation account is paired with an asset account or liability account , and offsets the value of the assets or liabilities in the paired account. Valuation accounts are only used in accrual basis accounting.

Accounting 40

Accounting Accounting Accruals Bookkeeping 40

Accounting Tools

FEBRUARY 16, 2024

If the accrual basis of accounting is used, this can result in a figure that is different from what cash flows would indicate, due to the accrual of expenses for which payments have not yet been made. This is used to determine the amount of earnings generated in a reporting period, net of income taxes.

Accruals 75

Accruals Financial Statements Account Receivables Accounts Receivable 75

Accounting Tools

JULY 15, 2024

The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. It is identical to the allowance for doubtful accounts. The two line items can be combined for reporting purposes to arrive at a net receivables figure.

Account Receivables 75

Account Receivables Accounts Receivable Accounts Receivable Accruals 75

Accounting Tools

JUNE 7, 2023

Cash Receipts Minus Cash Payments This appears at first to be the most direct method of deriving net cash flow, but the accounting transaction recording system does not aggregate or report information in this manner. Net Cash Flow Formula Net cash flow can be derived through either of the methods noted below.

Accruals 73

Accruals Financial Statements Accounting Accounting 73

Accounting Tools

MAY 4, 2023

Related Courses Fraud Examination Fraud Schemes How to Audit for Fraud What is Creative Accounting? Creative accounting involves the use of unorthodox techniques to adjust the reported profit level or financial position of a business. Types of Creative Accounting There are many creative accounting techniques.

Accounting 40

Accounting Accounting Accruals Auditing 40

Accounting Tools

AUGUST 14, 2024

What is the Modified Cash Basis of Accounting? The modified cash basis of accounting uses elements of both the cash basis and accrual basis of accounting. In essence, the modified cash basis uses the cash basis of accounting, with accrual adjustments added to it.

Accruals 40

Accruals Financial Statements Accounting Accounting 40

Accounting Tools

AUGUST 31, 2023

A key source of cash flow uncertainty is the timing of cash receipts from accounts receivable. There can be substantial differences between the cash flows and profits reported by a business, especially when it uses the accrual basis of accounting.

Accruals 75

Accruals Financial Statements Accounts Payable Accounts Payable 75

Accounting Tools

SEPTEMBER 7, 2023

This differs from an account payable , where there is no promissory note, nor is there an interest rate to be paid (though a penalty may be assessed if payment is made after a designated due date). An example of a notes payable is a loan issued to a company by a bank.

Accruals 75

Accruals Accounts Payable Accounts Payable Auditing 75

Accounting Tools

JULY 13, 2023

The unadjusted trial balance is the listing of general ledger account balances at the end of a reporting period, before any adjusting entries are made to the balances to create financial statements. The unadjusted trial balance is used as the starting point for analyzing account balances and making adjusting entries.

General Ledger 74

General Ledger Financial Statements Accruals Bookkeeping 74

Accounting Tools

OCTOBER 12, 2023

Accounting for Bad Debt There are two ways to record a bad debt, which are the direct write-off method and the allowance method. The direct write-off method is more commonly used by smaller businesses and those using the cash basis of accounting. The second situation is caused by a customer intentionally engaging in fraud.

Account Receivables 75

Account Receivables Accounts Receivable Accounts Receivable Accruals 75

Accounting Tools

OCTOBER 26, 2023

Related Courses Bookkeeper Education Bundle Bookkeeping Guidebook What is the Basis of Accounting? The basis of accounting refers to the methodology under which revenues and expenses are recognized in the financial statements of a business. They are noted below.

Accruals 40

Accruals Financial Statements Accounting Accounting 40

Accounting Tools

APRIL 5, 2023

For example, interest earned can be generated from funds invested in a certificate of deposit or an interest-bearing bank account. Accounting for Interest Earned If the entity recording interest earned is using the cash basis of accounting , then the amount of interest earned will be based on the amount of cash actually received.

Accruals 40

Accruals Corporate Finance Deposits Tax 40

Accounting Tools

APRIL 13, 2023

Related Courses Construction Accounting Fixed Asset Accounting How to Audit Fixed Assets What is Capitalized Interest? The capitalization of interest is required under the accrual basis of accounting , and results in an increase in the total amount of fixed assets appearing on the balance sheet.

Accruals 75

Accruals Record Keeping Auditing Accounting 75