Bookkeeping Essentials E-Book

Steven M. Bragg

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 429

Veröffentlichungsjahr: 2011

Beschreibung

The handy problem-solver with helpful information for today's busy bookkeepers Bookkeeping Essentials: How to Succeed as a Bookkeeper is the handy problem-solver that gives today's busy bookkeepers and accountants the helpful information they need in a quick-reference format. Whether in public practice or private industry, professionals will always have this reliable reference tool at their fingertips. * Packed with practical techniques and rules of thumb for analyzing, evaluating, and solving the day-to-day problems every accountant faces * Helps bookkeepers and accountants quickly pinpoint what to look for, what to watch out for, what to do, and how to do it * Offers hundreds of explanations supported by a multitude of examples, tables, charts, and ratios Filled with dozens of accounting best practices, Bookkeeping Essentials is a powerful companion for the ever-changing world of today's accountant and bookkeeper.

Leseprobe

Contents

Cover

Praise for Bookkeeping Essentials: How to Succeed as a Bookkeeper

Title Page

Copyright

Preface

Part One: The Basics of Bookkeeping

Chapter 1: Bookkeeping Basics

What Is Bookkeeping?

What Is the Job Description of a Bookkeeper?

What Is a Certified Public Accountant?

How Does a Bookkeeper Interact with a CPA?

What Are Generally Accepted Accounting Principles?

What Are International Financial Reporting Standards?

What Is the Income Statement?

What Is the Balance Sheet?

What Is an Accounting Period?

What Is a Transaction?

What Is the Accounting Cycle?

What Is the Cash Method of Accounting?

What Is the Accrual Method of Accounting?

What Is Double-Entry Bookkeeping?

Should Debits and Credits Always Balance?

How Do Debits and Credits Affect My Accounts?

What Are Accounting Principles?

What Are Accounts Receivable and Accounts Payable?

What Is Inventory?

What Is Depreciation?

What Is the General Ledger?

What Is the Trial Balance?

Chapter 2: Chart of Accounts

What Is a Chart of Accounts?

Should I Update the Chart of Accounts?

Should I Reduce the Chart of Accounts?

What Are the Main Account Categories in the Chart of Accounts?

What Are the Most Essential Accounts to Include in the Chart of Accounts?

What Does a Three-Digit Account Code Look Like?

What Does a Five-Digit Account Code Look Like?

What Does a Seven-Digit Account Code Look Like?

Chapter 3: General Ledger and Subledgers

What Is the General Ledger?

What Is a Subledger?

What Is a Journal Entry?

How Do I Record a Sale?

How Do I Record a Purchase?

How Do I Record a Payment?

How Do I Record a Cash Receipt?

Part Two: Daily Activities

Chapter 4: Payroll

What Is the Payroll Process Flow?

Which Payroll Controls Do I Need?

When Should I Pay a Salary Instead of Wages?

What Is the Difference between an Employee and a Contractor?

Who Is Liable for the Employees of Temporary Agencies?

How Do I Set Up a New Employee?

What Is a W-4 Form?

How Do I Record Employee Time Worked?

For Which Activities Should I Pay Wages?

How Do I Calculate a Workweek?

How Many Payroll Cycles Should I Have?

What Is the Difference between a Biweekly and Semimonthly Payroll?

How Do I Calculate Pay Under the Hourly Rate Plan?

How Do I Calculate Pay Under the Piece Rate Plan?

How Do I Calculate Salaries for Partial Periods?

How Do I Calculate Overtime?

How Do I Calculate Commissions?

Do I Record Employee Income for Life Insurance Coverage?

What Is a Cafeteria Plan?

What Is COBRA?

How Do I Calculate Federal Income Taxes?

How Do I Calculate Social Security Taxes?

How Do I Calculate Medicare Taxes?

How Do I Calculate the Federal Unemployment Tax?

Which Benefits Are Tax Exempt?

How Do I Calculate Net Pay?

How Do I Pay Employees with Cash?

How Do I Pay Employees with Checks?

Why Use Direct Deposit?

Why Use Payroll Cards?

How Do I Record a Payroll?

How Do I Record a Bonus Payment?

How Do I Record Cafeteria Plan Transactions?

How Do I Record a Manual Payroll Check?

How Do I Accrue Unpaid Wages?

How Do I Remit Federal Taxes?

How Do I Remit the Federal Unemployment Tax?

What Informational Payroll Reports Do I File with the Federal Government?

What Is a W-2 Form?

When Should I Outsource Payroll?

How Do I Measure Payroll Transaction Fees per Employee?

How Do I Calculate Annualized Wages per Employee?

Chapter 5: Purchasing and Payments

What Is the Purchasing Process Flow?

Which Purchasing and Payments Controls Do I Need?

How Many Payment Approvals Do I Need?

How Do I Handle an Expense Report?

How Do I Account for a Supplies Purchase?

How Do I Account for an Inventory Purchase?

How Do I Account for a Late Payment Fee?

How Do I Track Use Taxes?

How Do I Account for Personal Property Taxes?

How Do I Enter an Invoice That Has No Invoice Number?

How Do I Charge the Same Account Every Time?

How Do I Know When to Pay Bills?

What Is a Check Run and How Do I Process It?

Should I Process Repetitive Payments Differently?

What Is Petty Cash?

How Do I Account for Petty Cash?

When Should I Take an Early Payment Discount?

How Do I Notify a Supplier if I'm Not Paying an Invoice?

How Do I Process 1099 Forms?

How Should I Measure Supplier Compliance with Purchase Orders?

How Should I Measure Credit Card Usage?

Chapter 6: Billing and Collections

What Is the Billing and Collections Process Flow?

Which Billing and Collections Controls Do I Need?

How Do I Grant Credit to a Customer?

How Do I Obtain a Credit Report About a Customer?

How Do I Create a Customer Invoice?

How Does a Sales Receipt Vary from an Invoice?

How Do I Account for a Customer Invoice?

How Do I Account for a Sales Receipt?

What Is Nexus?

How Do I Account for Sales Taxes?

How Do I Account for Credit Card Sales?

How Do I Account for Sales Discounts?

How Do I Account for Sales Returns?

What Is the Best Invoice Layout?

When Should I Use Statements?

How Frequently Should I Issue Invoices?

Should I Issue Invoices Early?

Should I Issue a Separate Invoice for Each Line Item?

When Should I Offer an Early Payment Discount?

How Do I Remit Sales Taxes?

What Is a Credit Memo and When Should I Issue One?

How Do I Monitor Accounts Receivable?

How Do I Collect an Overdue Invoice?

How Should I Measure Days’ Sales Outstanding?

How Should I Measure the Collection Effectiveness Index?

Chapter 7: Cash Management

What Is the Cash Management Process Flow?

Which Cash Management Controls Do I Need?

How Do I Account for a Payment for an Account Receivable?

How Do I Record a Disputed Credit Card Payment?

What Is a Remittance Advice?

How Do I Use a Suspense Account?

How Frequently Should I Post Check Receipts?

Should I Use a Lockbox?

Should I Use a Remote Deposit Capture Device?

What Is a Deposit in Transit?

What Is an NSF Check?

How Do I Monitor Cash Balances?

How Do I Create a Bank Reconciliation?

How Do I Fix an Incomplete Bank Reconciliation?

How Do I Forecast Cash?

How Should I Invest Cash?

How Do I Measure the Sufficiency of Cash?

How Do I Measure How Long a Company Can Survive with Existing Cash?

Chapter 8: Inventory

What Is Inventory?

What Is the Cost of Goods Sold?

What Is the Periodic Inventory System?

What Is the Perpetual Inventory System?

How Do I Improve Inventory Record Accuracy?

How Do I Estimate Ending Inventory with the Retail Method?

What Is Absorption Costing?

What Is Standard Costing?

Which Variances from Standard Cost Should I Track?

What Is the First In, First Out Method?

What Is the Last In, First Out Method?

How Do I Calculate the Lower of Cost or Market?

How Do I Identify Obsolete Inventory?

How Do I Account for Obsolete Inventory?

How Do I Account for a Sales Return?

How Do I Calculate Average Inventory?

How Do I Calculate Inventory Turnover?

Chapter 9: Fixed Assets

What Is a Fixed Asset?

What Is an Intangible Asset?

What Is a Capital Expenditure?

What Is the Useful Life of an Asset?

What Is a Capitalization Limit?

Which Costs Can I Assign to a Fixed Asset?

When Do I Stop Assigning Costs to a Fixed Asset?

What Is Depreciation?

What Is Accumulated Depreciation?

What Is Amortization?

What Is Accumulated Amortization?

Which Fixed Assets Can I Not Depreciate?

How Do I Calculate Straight-Line Depreciation?

How Do I Calculate Sum-of-the-Years’ Digits Depreciation?

How Do I Calculate Double-Declining Balance Depreciation?

What Is MACRS?

How Do I Record Depreciation Expense?

When Do I Eliminate Accumulated Depreciation?

When Is a Fixed Asset Impaired?

When Do I Derecognize an Asset?

How Do I Record a Gain or Loss on an Asset Sale?

What Controls Should I Have Over Fixed Assets?

Why Is the Repairs and Maintenance to Fixed Assets Ratio Important?

How Do I Calculate the Accumulated Depreciation to Fixed Assets Ratio?

Chapter 10: Debt Accounting

What Is Simple Interest?

What Is Compound Interest?

How Do I Separate Principal from Interest?

When Is Debt Categorized as Short Term or Long Term?

How Do I Record Debt?

Part Three: Creating Financial Statements

Chapter 11: The Trial Balance

What Is a Trial Balance?

Are There No Errors in a Balanced Trial Balance?

How Do I Detect Errors in a Trial Balance?

What Are Unadjusted and Adjusted Trial Balances?

What Adjustments Should I Make to the Trial Balance?

How Do I Calculate the Allowance for Doubtful Accounts?

How Do I Calculate a Wage Accrual?

What Is a Post-Closing Trial Balance?

How Do I Create a Financial Statement Worksheet?

Chapter 12: Closing the Books

What Is “Closing the Books”?

What Is Included in a Closing Checklist?

What Closing Activities Should I Complete Prior to the End of the Period?

What Closing Activities Should I Complete After the End of the Period?

What Closing Activities Should I Complete After Issuing the Financial Statements?

How Do Reporting Changes Improve the Close?

How Can I Improve the Inventory Close?

How Can I Improve the Payroll Close?

How Can I Improve the Payables Close?

How Do I Prepare the Books for the Next Accounting Period?

Chapter 13: Balance Sheet

What Is a Balance Sheet?

Which Line Items Do I Include in a Balance Sheet?

What Are Current Assets?

What Are Long-Term Assets?

What Are Current Liabilities?

What Are Long-Term Liabilities?

What Is Shareholders’ Equity?

What Does a Balance Sheet Look Like?

How Do I Create a Balance Sheet?

Should There Be Negative Cash on the Balance Sheet?

How Does an Expense Impact the Balance Sheet?

Where Do Accruals Appear on the Balance Sheet?

How Do I Calculate the Current Ratio?

How Do I Calculate the Quick Ratio?

How Do I Calculate the Debt to Equity Ratio?

Chapter 14: Income Statement

What Is an Income Statement?

How Many Periods Should I Include in an Income Statement?

Which Line Items Should I Include in an Income Statement?

What Information Appears in the Income Statement Header?

What Does an Income Statement Look Like?

What Is a Single-Step Income Statement?

What Is a Multistep Income Statement?

What Is a Condensed Income Statement?

How Do I Create an Income Statement?

How Do I Calculate the Cost of Goods Sold?

What Is a Discontinued Operation?

What Is an Extraordinary Item?

What Is Other Comprehensive Income?

When Do I Calculate Earnings Per Share?

How Do I Apply Vertical Analysis to the Income Statement?

How Do I Apply Horizontal Analysis to the Income Statement?

What Are Net Credit Sales?

How Do I Calculate the Gross Profit Percentage?

How Do I Calculate the Net Income Percentage?

Part Four: Controls

Chapter 15: Budgeting

Why Is Budgeting Important?

How Do the Various Budgets Fit Together?

How Is the Revenue Budget Constructed?

How Are the Production and Inventory Budgets Constructed?

How Is the Purchasing Budget Constructed?

How Is the Direct Labor Budget Constructed?

How Is the Overhead Budget Constructed?

How Is the Cost of Goods Sold Budget Constructed?

How Is the Sales Department Budget Constructed?

How Is the Marketing Budget Constructed?

How Is the General and Administrative Budget Constructed?

How Is the Staffing Budget Constructed?

How Is the Facilities Budget Constructed?

How Is the Research Department Budget Constructed?

How Is the Capital Budget Constructed?

How Are the Budgeted Financial Statements Constructed?

How Is the Financing Budget Constructed?

What Is a Flex Budget?

Chapter 16: Control Systems

What Are the Controls for a Computerized Accounts Payable System?

What Are the Controls for Procurement Cards?

What Are the Controls for Order Entry, Credit, and Shipping?

What Are the Controls for a Perpetual Inventory Tracking System?

What Are the Controls for Billing?

What Are the Controls for Collections?

What Are the Controls for Check Receipts?

What Are the Controls for Payroll?

Part Five: Other Topics

Chapter 17: Record Keeping

What Filing System Should I Have?

What Document Retention Policy Should I Have?

What Storage Area Policy Should I Have?

What Box Storage Procedures Should I Have?

What Document Destruction Procedure Should I Use?

How Should I Store Confidential Documents?

What Tax Records Should I Maintain?

Chapter 18: Cost Reduction Opportunities

What Reports Are Used for Cost Reduction Projects?

What Is Spend Analysis?

How Does Supplier Consolidation Work?

How Does Parts Consolidation Work?

What Is Spend Compliance?

Which Reports Should Be Used for Spend Analysis?

What Is the Analysis for a Workforce Reduction?

What Is the Cost of a Workforce Reduction?

What Are the Alternatives to a Workforce Reduction?

How Does 5S Analysis Reduce Costs?

What Is Waste Analysis?

Appendices

Appendix A: Journal Entries

Cash

Current Liabilities

Dividends

Fixed Assets

Inventory Adjustments

Inventory Valuation

Leases—Lessee Accounting

Long-Term Construction Contracts

Receivables

Revenue, Service

Stock

Treasury Stock

Appendix B: Beginning Bookkeeper Checklist

Glossary

About the Author

Index

Praise for Bookkeeping Essentials: How to Succeed as a Bookkeeper

“Finally! Steven Bragg has provided the bookkeeping world with exactly what has been lacking. Bookkeeping Essentials strikes the perfect balance between training guide and handy resource, and therefore it is a must-have for all small businesses, whether start-up or established.”

—Kevin Harris, President of QuickSolvers, Inc., a small business accounting services company

“I am often asked by clients for an easy-to-understand reference book for their bookkeepers to use. Steven Bragg has written that book. People have questions they seek an answer for and this book has those questions with clear, concise, and understandable answers.”

—Joel M. Ungar, CPA, CFE, Silberstein Ungar, PLLC

“Providing both the novice and entry-level bookkeeper with solid, actionable understanding, Steve Bragg has authored a clear and concise guide for anyone entering this field. I would recommend this book as the perfect reference for everyone entering, or even into their career as a bookkeeper. My staff will each be getting their own copies.”

—Kenneth A. Koch, CEO, Business Resource Management, Inc.

Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Bragg, Steven M.

Bookkeeping essentials: how to succeed as a bookkeeper/Steven M. Bragg.

p. cm.

Includes index.

ISBN 978-0-470-88255-9 (pbk.); ISBN 978-1-118-01941-2 (ebk); ISBN 978-1-118-01942-9 (ebk); ISBN 978-1-118-01943-6 (ebk)

1. Bookkeeping. 2. Accounting. 3. Fraud–Prevention. I. Title.

HF5636.B832 2011

657'.2–dc22

2010045244

Preface

This is a handy problem-solver for the bookkeeper. It covers the multitude of areas that a bookkeeper may address during the working day—how to handle payroll, purchases, billings, cash, fixed assets, and inventory, as well as how to create financial statements. It does so with concise explanations that are supported by examples, tables, and ratios. The layout is designed for quick comprehension of such questions as:

What is the bookkeeper's job description?What is the accounting cycle?What are the cash and accrual methods of accounting?What numbering system should I use for the chart of accounts?Should I take an early payment discount?How do I process payroll?How do I remit payroll taxes?How do I account for sales taxes?How do I use a suspense account?What is the best way to process cash receipts?What are the periodic and perpetual inventory systems?What do FIFO and LIFO mean?What is a capitalization limit?What costs can I assign to a fixed asset?How do I separate principal from interest in a loan payment?What are unadjusted and adjusted trial balances?How do I close the books?How do I create a balance sheet?How do I create an income statement?How do I create a budget?What types of controls should I install?

Part One (Chapters 1–3) addresses the fundamentals of bookkeeping—such as the job description of the bookkeeper, key terms, what a journal entry is and where you record it, and what the most commonly used financial statements are all about.

Part Two (Chapters 4–10) describes the topics that a bookkeeper handles every day—calculating and paying payroll, buying from suppliers and paying them, handling cash receipts, tracking inventory, and so forth. Also, these chapters describe exactly how to record key transactions.

Part Three (Chapters 11–14) shows you exactly how to create financial statements, beginning with the trial balance and how to adjust it, and progressing through the compilation of the balance sheet and income statement.

Part Four (Chapters 15–16) describes the primary control systems that a bookkeeper needs to ensure that transactions are as error-free as possible. It also describes a comprehensive budgeting system.

Part Five (Chapters 17–18) describes how to create a record-keeping system that keeps you from being buried in paperwork, and also addresses a number of ways to reduce expenses.

The Appendixes include a list of dozens of journal entries that the bookkeeper can use to record daily business transactions, as well as a checklist of activities that the beginning bookkeeper should be aware of when starting a bookkeeping position.

Throughout, this book includes commentary (“For Accounting Software”) on how to handle selected bookkeeping transactions in your computer system. Further, the book has been structured to provide concise answers to the questions that a bookkeeper is most likely to encounter during a typical business day. Keep it handy for easy reference and daily use.

Part One

The Basics of Bookkeeping

Chapter 1

Bookkeeping Basics

What Is Bookkeeping?

Bookkeeping is how you record and report on the financial transactions of a business. The bookkeeper is responsible for initially recording basic accounting transactions, such as issuing invoices to customers, recording cash receipts, and paying employees. Bookkeeping is rarely conducted entirely on paper anymore. Instead, the bookkeeper uses a low-end accounting software package to record transactions. The software makes it easier to record transactions, and also summarizes the information into financial reports that are useful to the owners of the business to see how it is operating.

What Is the Job Description of a Bookkeeper?

The following is a detailed description of the tasks for which a bookkeeper is responsible. These line items may vary somewhat for companies located in specialized industries, but the description covers the bulk of all bookkeeper activities.