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

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

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

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

OCTOBER 25, 2023

Related Courses Financial Analysis The Interpretation of Financial Statements What is the Accounting Breakeven Point? The accounting breakeven point is the sales level at which a business generates exactly zero profits , given a certain amount of fixed costs that it must pay for in each period.

Accruals 75

Accruals Accounting Accounting Financial Analysis 75

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

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

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.

Accruals 75

Accruals Accounting Accounting General Ledger 75

Accounting Tools

APRIL 12, 2023

Related Courses Bookkeeper Education Bundle Bookkeeping Guidebook What is the Cash Basis of Accounting? The cash basis of accounting is the practice of recording revenue when cash has been received, and recording expenses when cash has been paid out. The accrual basis is most commonly used by larger businesses.

Accruals 75

Accruals Financial Statements Accounting Accounting 75

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

MAY 21, 2023

Related Courses Bookkeeping Guidebook Closing the Books New Controller Guidebook What are Accounting Adjustments? An accounting adjustment is a business transaction that has not yet been included in the accounting records of a business as of a specific date. Recognizing revenue that has not yet been billed.

Accruals 75

Accruals Accounting Accounting Billing 75

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

OCTOBER 22, 2024

Related AccountingTools Courses Accountants' Guidebook Bookkeeping Guidebook The Income Statement The proportions of costs incurred can vary dramatically by business, depending upon the sales model used. How to Account for Selling Expense There are varying treatments of selling expenses.

Accruals 52

Accruals Payroll Bookkeeping Tax 52

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

OCTOBER 18, 2024

What is Accounting Profit? Accounting profit is the profit of a business that includes all revenue and expense items mandated under an accounting framework. Examples of accounting frameworks are Generally Accepted Accounting Principles ( GAAP ) and International Financial Reporting Standards ( IFRS ).

Accounting 40

Accounting Accounting Accruals Financial Statements 40

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

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

JULY 16, 2023

Related Courses Accountants’ Guidebook Bookkeeper Education Bundle Bookkeeping Guidebook What is Double Entry Accounting? Double entry accounting is a record keeping system under which every transaction is recorded in at least two accounts. Their definitions are noted below.

Accounting 40

Accounting Accounting Bookkeeping Accounts Receivable 40

Accounting Tools

SEPTEMBER 28, 2023

What is Accounting Income? Accounting income is profitability that has been compiled using the accrual basis of accounting. In general, accounting income is the change in net assets during a reporting period, excluding any receipts from or disbursements to owners.

Accruals 40

Accruals 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

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.

Accounting 75

Accounting Accounting Accounts Receivable Accounts Receivable 75

Accounting Tools

SEPTEMBER 29, 2023

Related Courses Bookkeeping Guidebook New Controller Guidebook What is an Accounting Estimate? An accounting estimate is an approximation of the amount of a business transaction for which there is no precise means of measurement. The amount of an accounting estimate is based on historical evidence and the judgment of the accountant.

Accruals 40

Accruals Accounting Accounting Financial Statements 40

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

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

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

APRIL 5, 2023

Related Courses Bookkeeping Guidebook Closing the Books The Year-End Close What are Final Accounts? Final accounts is a somewhat archaic bookkeeping term that refers to the final trial balance at the end of an accounting period from which the financial statements are derived.

Accruals 40

Accruals Financial Statements Accounting Accounting 40

Accounting Tools

AUGUST 21, 2024

Differences between net profit and net cash flows include timing issues related to accrual-basis accounting and the reduction of cash flows caused by expenditures for fixed assets. Net Cash Flow Net profit is not the same as net cash flows, which appears in the statement of cash flows.

Accruals 52

Accruals Financial Statements Tax Accounting 52

Accounting Tools

JULY 20, 2024

The concept is typically used to compile the amount of unpaid interest that is either receivable to or payable by a business at the end of an accounting period , so that the transaction is recorded in the correct period. This approach is only used under the accrual basis of accounting. Accounting by the payment recipient.

Accruals 40

Accruals Financial Statements Bookkeeping Accounting 40

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

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

APRIL 25, 2024

Rent expense is an account that lists the cost of occupying rental property during a reporting period. In each reporting month, MiLady’s accountant records rent expense of $20,000 on the company’s income statement as an operating expense. What is Rent Expense? For the full year, the company’s rent expense sums to $240,000.

Accruals 40

Accruals Expense Reports Accounting Accounting 40

Accounting Tools

SEPTEMBER 28, 2023

Related Courses Accounting Changes and Error Corrections What is an Accounting Change? An accounting change is a change in accounting principle , accounting estimate , or the reporting entity. An accounting change may require discussion in the notes accompanying the financial statements.

Financial Statements 40

Financial Statements Accounting Accounting Accruals 40

Accounting Tools

MARCH 22, 2024

What is Accrue in Accounting? To accrue means to record revenues or expenses in the accounting records that have not yet been entered. This approach is used in accrual basis accounting as part of the closing process at the end of each reporting period. When Not to Accrue Accruals are not used in cash basis accounting.

Accruals 40

Accruals Billing Accounting Accounting 40

Accounting Tools

JULY 8, 2024

Related AccountingTools Courses The Income Statement The Interpretation of Financial Statements Accounting for Utilities Expense The utilities expense incurred by a company's manufacturing operations is considered part of its factory overhead. A utilities provider may require a deposit from a business prior to providing service.

Accruals 40

Accruals Deposits Invoicing Billing 40

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 Reconciling 75

Accounting Tools

OCTOBER 24, 2023

Related Courses Bookkeeping Guidebook How to Audit Receivables New Controller Guidebook What is Gross Accounts Receivable? Gross accounts receivable is the amount of sales that a business has made on credit, and for which no payment has yet been received. Under the alternative cash basis of accounting , receivables are not recorded.

Accounts Receivable 40

Accounts Receivable Accounts Receivable Account Receivables Accounting 40

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