Accounting Tools

JULY 30, 2023

For example, the client's bank statements could be perused to see if any payments to suppliers were not recorded in the books, or if cash receipts from customers were not recorded. For example, the auditors can observe an inventory being taken, to see if the inventory stated in the accounting records actually exists.

Auditing 75

Auditing Financial Statements Invoicing Accounting 75

Accounting Tools

JUNE 11, 2023

The cost of sales is calculated as beginning inventory + purchases - ending inventory. Example of the Cost of Sales A company has $10,000 of inventory on hand at the beginning of the month, expends $25,000 on various inventory items during the month, and has $8,000 of inventory on hand at the end of the month.

Cost Accounting 75

Cost Accounting Accounts Payable Accounts Payable Bookkeeping 75

Accounting Tools

MAY 24, 2023

Related Courses Closing the Books The Soft Close The Year-End Close What is a Soft Close? A soft close is defined as closing the books using an abbreviated closing procedure. By using a soft close, the accounting department can issue financial statements very quickly and then return to its normal day-to-day activities.

Accruals 75

Accruals Financial Statements Account Reconciliation Auditing 75

Accounting Tools

APRIL 9, 2024

In total, this inventory has a book value of $2,000,000. By the end of the selling season, which is January, Dude still has 7,000 fat powder skis in inventory. Accordingly, the accountant writes down the carrying amount of the remaining ski inventory by $525,000. Related Article How to Write Off a Fixed Asset

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

JULY 14, 2023

Related Courses Revenue Management What is the Booking Limit? The booking limit is a restriction on the maximum amount of inventory that can be sold at a certain price. Once all 50 seats have been booked, the booking limit has been reached for that block of seats and no further tickets will be sold at the $200 price.

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Accounting Tools

OCTOBER 9, 2023

Related Courses Closing the Books The Soft Close The Year-End Close How to Prepare Financial Statements The preparation of financial statements involves the process of aggregating accounting information into a standardized set of financials. Finally, prepare a cover letter that explains key points in the financial statements.

Financial Statements 75

Financial Statements General Ledger Bank Reconciliation Invoicing 75

Accounting Tools

JUNE 14, 2023

Related Courses Accounting for Inventory How to Audit Inventory Inventory Management What is Inventory Shrinkage? Inventory shrinkage is the excess amount of inventory listed in the accounting records , but which no longer exists in the actual inventory.

Billing 40

Billing Auditing Invoicing Accounting 40

Accounting Tools

MAY 19, 2023

Examples of Ledger Accounts Examples of ledger accounts are cash, accounts receivable, inventory, fixed assets, accounts payable accrued expenses, debt, stockholders’ equity, revenue, cost of goods sold, salaries and wages, offices expenses, depreciation, and income tax expense.

General Ledger 75

General Ledger Accounting Accounting Reconciling 75

Accounting Tools

OCTOBER 1, 2023

Related Courses Accounting for Inventory Ending inventory is a key requirement when a business is closing its books. Thus, without an accurate ending inventory figure, it is impossible to determine a firm’s profitability. It is needed to derive the cost of goods sold , which in turn is needed to calculate profits.

Accounting 40

Accounting Accounting 40

Accounting Tools

AUGUST 6, 2023

Related Courses Closing the Books The Soft Close The Year-End Close What are Year-End Adjustments? 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.

General Ledger 75

General Ledger Accruals Billing Reconciling 75

Accounting Tools

JUNE 12, 2023

Examples of subsidiary ledgers are the accounts payable ledger , accounts receivable ledger , fixed assets ledger, inventory ledger , and purchases ledger. Terms Similar to Subsidiary Ledger A subsidiary ledger is also known as a subledger or a subaccount.

General Ledger 75

General Ledger Bookkeeping Financial Statements Accounts Payable 75

Accounting Tools

JULY 28, 2023

Related Courses Accounting for Inventory Activity-Based Costing Cost Accounting Fundamentals What is a Plantwide Overhead Rate? Doing so improves the accuracy of overhead allocation, but increases the amount of time required to close the books. It is most commonly used in smaller entities with simple cost structures.

Financial Statements 75

Financial Statements Cost Accounting Accounting Accounting 75

Accounting Tools

JUNE 19, 2023

Related Courses Bookkeeping Guidebook Closing the Books The Year-End Close What is a Post-Closing Trial Balance? For this reason, most procedures for closing the books do not include a step for printing and reviewing the post-closing trial balance.

General Ledger 75

General Ledger Computation Accounts Payable Accounts Payable 75

Accounting Tools

JULY 15, 2023

To create a stream of deliveries into the buyer's premises that minimize the raw materials inventory investment while still ensuring that goods are available as needed. To minimize the amount of cash invested in inventory. To buy items that meet the quality specifications of the buyer.

Purchase Order 74

Purchase Order Accounts Payable Accounts Payable Auditing 74

Accounting Tools

JUNE 7, 2023

Related Courses Bookkeeper Education Bundle Bookkeeping Guidebook Closing the Books Posting in accounting is when the balances in subledgers and the general journal are shifted into the general ledger. Posting is also used when a parent company maintains separate sets of books for each of its subsidiary companies.

General Ledger 75

General Ledger Accounting Accounting Financial Statements 75

Accounting Tools

AUGUST 6, 2023

Under these circumstances, an organization may charge to expense older costs that have been on the books for some time, and which can only be replaced at higher current costs. When these inventory items are eventually sold, their earlier (and lower) costs are charged to expense. Related Articles Flow of Costs

Financial Analysis 40

Financial Analysis Financial Statements 40

Accounting Tools

JULY 8, 2023

Related Articles Account Analysis Accounting Adjustments Books of Original Entry General Ledger Accounts How to Write an Accounting Journal Entry The Difference Between Nominal Accounts and Real Accounts Thus, when a fixed asset is sold, the accumulated depreciation associated with it is reversed.

Accounting 75

Accounting Accounting General Ledger Accounts Receivable 75

Accounting Tools

MARCH 20, 2024

Conservative Policies The aggressiveness or conservativeness of a firm's accounting policies provides an indicator of how the management team uses accounting to pursue higher "book" profits.

Financial Statements 40

Financial Statements Accounting Accounting Bookkeeping 40

Accounting Tools

DECEMBER 30, 2023

WIP is one of the three types of inventory, of which the others are raw materials and finished goods. To make the accounting process easier, some companies complete all WIP items and transfer them into finished goods inventory prior to closing the books, so that there is no WIP to account for.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

SEPTEMBER 29, 2023

For example, auditors might examine the inventory records of a firm a few months prior to year-end to determine the accuracy of its inventory records, while issuing receivable confirmations a few months later, after the books have closed for the year.

Auditing 40

Auditing Financial Statements Collections Accounting 40

Accounting Tools

MAY 21, 2023

Related Courses Bookkeeping Guidebook Closing the Books New Controller Guidebook What are Accounting Adjustments? Examples of Accounting Adjustments Examples of accounting adjustments are as follows: Altering the amount in a reserve account, such as the allowance for doubtful account s or the inventory obsolescence reserve.

Accruals 75

Accruals Accounting Accounting Billing 75

Accounting Tools

JANUARY 20, 2024

The lack of a supplier billing is typically because the invoice is in transit, and does not arrive from the supplier until after the books have been closed for the reporting period. Accrued costs are not used in a business that operates under the cash basis of accounting , since it only records transactions when there is a transfer of cash.

Purchase Order 40

Purchase Order Billing Financial Statements Invoicing 40

Accounting Tools

SEPTEMBER 20, 2023

Related Courses Closing the Books The Soft Close The Year-End Close How to Automate the Cutoff An intensely manual process at the end of each reporting period is the cut off of incoming inventory items. Related Articles Accounts that are Closed at Year End The Soft Close The Virtual Close

Purchase Order 40

Purchase Order Computation Invoicing Accounting 40

Accounting Tools

SEPTEMBER 7, 2023

Related Courses Accounting for Inventory How to Audit Inventory What is the Accounting for Obsolete Inventory? Inventory may become obsolete over time, and so must be removed from the inventory records. Obsolescence is usually detected by a materials review board.

Accounting 40

Accounting Accounting Financial Statements Auditing 40

Less Accounting

MAY 13, 2024

This article explores the numerous ways in which effective outsourced bookkeeping can bolster small business growth. For example, a software company that grew from 10 to 50 employees expanded its outsourced bookkeeping services to include payroll and inventory management.

Outsourced Bookkeeping 59

Outsourced Bookkeeping Bookkeeping Bookkeeping Services Small Business Bookkeeping 59

Accounting Tools

OCTOBER 14, 2023

Calculation of the Operating Assets Ratio To derive the operating assets ratio, divide the total amount of non-cash assets listed on the balance sheet by the book value of all assets used to generate revenues. Both accounts receivable and inventory should be included in the calculation.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Financial Statements 40

Accounting Tools

SEPTEMBER 24, 2023

This cushion is usually created for estimated expenses, such as accrued bonuses, the bad debt reserve , the obsolete inventory reserve, and the warranty reserve. Related Articles Accounting Cushion Cook the Books Cookie Jar Accounting Creative Accounting Earnings Management Secret Reserve

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

FEBRUARY 11, 2024

In this system, only a single notation is made of a transaction; it is usually an entry in a check book or cash journal, indicating the receipt or expenditure of cash. A single entry system is only designed to produce an income statement. A single entry system must be converted into a double entry system in order to produce a balance sheet.

Accounts Payable 75

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 75

Accounting Tools

OCTOBER 22, 2023

Prudence would normally be exercised in setting up, for example, an allowance for doubtful accounts or a reserve for obsolete inventory. Related Articles Accounting Convention Faithful Representation The Characteristics of Useful Accounting Information The prudence concept is only a general guideline.

Financial Statements 75

Financial Statements Bookkeeping Financial Reporting Accounting 75

Accounting Tools

JULY 21, 2023

When equipment in the fixed asset category is expected to be sold off or otherwise disposed of within one year, its book value is still classified as a long-term asset; even in this situation, it is still not classified as a current asset.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

SEPTEMBER 21, 2023

Related Courses Accounting for Inventory How to Audit Inventory Inventory Management What is a Perpetual Inventory System? Under the perpetual inventory system, an entity continually updates its inventory records in real time. We describe these advantages below.

Accounts Payable 40

Accounts Payable Accounts Payable Data Entry Record Keeping 40

Accounting Tools

OCTOBER 7, 2023

Related Courses Effective Customer Service Inventory Management What is a Back Order? Back orders are heavily influenced by the inventory stocking policies of a business. However, this requires a major investment in inventory, and may result in write-offs related to obsolete goods.

Customer Service 40

Customer Service Accounting Accounting 40

Accounting Tools

OCTOBER 11, 2023

Related Courses Accountants’ Guidebook Closing the Books What are Adjusting Entries? For example, adjusting entries may be used to record received inventory for which no supplier invoice has yet been received.

Financial Statements 40

Financial Statements Invoicing Billing Accounting 40

Accounting Tools

DECEMBER 22, 2023

It is not a good measure of the liquidity of a business, since the assets that comprise the measure may be difficult to liquidate, such as inventory and fixed assets. Related Article Book Value The business also has $80,000 of accounts payable and a $350,000 loan, which gives it total liabilities of $430,000.

Accounts Payable 40

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 40

Accounting Tools

MAY 21, 2023

Related Courses Closing the Books The Balance Sheet The Year-End Close The balance sheet is one of the three reports within the financial statements. There are a number of steps to follow to prepare a balance sheet. The recommended approach to doing so is noted in the following steps.

General Ledger 75

General Ledger Financial Statements Accounts Payable Accounts Payable 75

Accounting Tools

JUNE 10, 2023

These assets are a subset of the current assets classification, for they do not include inventory (which can take an excess amount of time to convert into cash). In the latter case, the only quick asset on the books may be trade receivables. This is not the case for current assets, which also includes inventory.

Financial Statements 40

Financial Statements Accounts Receivable Accounts Receivable Account Receivables 40

Accounting Tools

NOVEMBER 8, 2023

Subtract from the total of these assets the amounts recorded on the books for any intangible assets. Divide the net amount derived in step 4 by the ending book balance of all debt outstanding. The assets are stated at their book values , which may not equate to their market values.

General Ledger 40

General Ledger Financial Statements Collections Accounts Receivable 40