Similarities and Dissimilarities Concerning Bookkeeping and Accounting

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People today with proficiency and interest in figures and mathematics have a amount of occupations to contemplate. Bookkeeping is 1 place of perform to contemplate, as is accounting. Although some of the techniques and duties of these two occupations might overlap, they both of those have exclusive career descriptions that set them aside from each individual other.

Job Description of a Bookkeeper

This job necessitates the obligation of recording financial transactions in the chronological purchase in which they come about for a business or an specific. The recording of the transactions have to come about each day for an ongoing report of exercise. Application applications are now out there, which automate considerably of these processes for a corporation or an specific person. Added duties might involve classifying and summarizing financial info and transferring this info to periodic financial studies. The professional tasked with these added duties will not be at the similar degree of an accountant, but this placement is larger than an entry-degree personnel.

Job Description of an Accountant

This job consists of using info recorded in financial statements and analyzing it for a business or an specific. This personnel performs this perform in accordance with set rules, necessities, and criteria. After doing this analysis, the personnel finalizes the interpretation by planning a report. A business operator can foundation future business selections upon info in the report, guaranteeing that the operator has all pertinent info about revenue, expenditures, account balances, and investments.

Similarities and Dissimilarities

While both of those occupations contain financial info, an accountant’s perform involves far more analysis and reporting than the placement of bookkeeping involves. Depending on the specific corporation and its sizing, it is really possible that a bookkeeping placement could contain numerous duties that normally fall to an accountant. This is especially correct since computer software can do away with a whole lot of the analysis perform that an accountant ordinarily performs. Automation and classification that used to require a human is now a simple course of action for a computer system.

Preparing for this far more highly developed vocation will take far more time and exertion than it does to put together for a bookkeeping placement. A student normally earns a bachelor’s degree however, numerous students go on to receive highly developed degrees in this field of research. Within just a corporation, an accountant generally oversees and supervises a division, doing the job with bookkeepers that complete numerous of the each day financial duties vital for the financial wellness of the corporation.

Landing a Bookkeeping Job

Competition can be major for anyone trying to find this variety of vocation. A higher education degree is not necessary however, someone who wishes to make certain success could contemplate earning an associate’s degree in this field. Several persons further more their education and learning in the field with on-the-career coaching. Performing towards official certification can also help persons industry their techniques far more efficiently.

Performing in this field has a amount of strengths. Salaries are aggressive …

Deferred Rent – Debits and Credits

Deferred Rent

What is it?

The simplest way to understand deferred rent is to think of an example. Let’s say you started a business and the first thing you did was sign a five-year lease for office space. In an effort to sign you as a tenant, the landlord (aka “lessor”) offers you lower rent payments in the first year that “escalate” (i.e. go up) as the years progress. To keep it simple, let’s say the rent schedule is this:

Year 1: $1,000 / month = $12,000 / year
Year 2: $1,250 / month = $15,000 / year
Year 3: $1,500 / month = $18,000 / year
Year 4: $1,750 / month = $21,000 / year
Year 5: $2,000 / month = $24,000 / year

These amounts represent the actual cash that you will be paying each month. When booking the journal entries for this, this will be the credit (either to cash or a payable). The question is what is the debit?

ASC section 840-20-25-1 states the following:

Rent shall be charged to expense by lessees (reported as income by lessors) over the lease term as it becomes payable (receivable). If rental payments are not made on a straight-line basis, rental expense nevertheless shall be recognized on a straight-line basis unless another systematic and rational basis is more representative of the time pattern in which use benefit is derived from the leased property, in which case that basis shall be used.

You see, the FASB requires that rental expense be “recognized on a straight-line basis.” This means that the same amount of expense must be recognized each month, regardless of the actual rent payment during the month. Let’s calculate our monthly rent expense.

From the table above, we can easily compute that the total rent paid over the course of the lease is $90,000. ($12k +$15k + $18k + $21k + $24k). This figure, divided by the total months in the lease (60), gives us out straight-line rent expense:

Total Rent / Total Periods = Straight-Line Rent Expense per period

$90,000 / 60 months = $1,500 / month = $18,000 per year.

We now have the debit in our journal entry.

With a debit to expense for one amount and a credit to cash for another amount, the plug goes to deferred rent. Depending on the payment schedule, deferred rent can either be an asset or a liability.

In the case of a lease with increasing payments each year, as in our example, deferred rent is a liability. The liability balance builds through the first two years when the expense exceeds the cash payments, levels off during year 3 when these amounts are equal, and then drops down to zero over the course of the final two years when rent expense is less than the rent payments. The journal entries for each year are as follows:

Journal Entries – Year 1

Dr. Rent expense 1,500
Cr. Deferred rent 500
Cr. Cash 1,000

Journal Entries – Year 2

Dr. Rent …

Ethics in Accounting

“Ethics in its broader sense, deals with human conduct in relation to what is morally good and bad, right and wrong. It is the application of values to decision making. These values include honesty, fairness, responsibility, respect and compassion.”

-Rushworth Kidder
President, Institute for Global Ethic

While implementing and upholding a code of ethics is becoming increasingly more focused upon by many business organizations, adhering to the highest standards of ethical conduct is especially important in the accounting profession, where the financial decisions of a business are directly based on information and judgments provided by their accountants.

In recent years domestic and international concern over business ethical standards as well as social and corporate responsibility has become increasingly more significant. This is evidenced by the emergence of both government and private organizations whose objectives are to define and/or enforce high ethical standards, and by the willingness of businesses to institute their own ethical codes and value statements. Organizations such as the Corporate Responsibility Officer (CRO) publish corporate responsibility reports and profiles, and have even published the “100 Best Corporate Citizens”. In today’s competitive global economy, being recognized for ethical quality can greatly contribute to profitability.

This increased focus on ethics has extended to the accounting profession. Two business organizations for accounting professionals, the American Institute of Certified Public Accountants (AICPA) and the Institute of Management Accountants (IMA) have published ethics codes for their members. The AICPA’s Code of Professional Conduct includes Principles of Professional Conduct, General Accounting Standards Principles, and a section on Independence, Integrity, and Objectivity. These are recognized as three crucial characteristics for accounting professionals to be successful and ethically responsible. Independence refers to an accountant’s financial relationship with a client, and prohibits certain relationships that may lead to bias or present a conflict of interest in the accountant’s financial reporting. Integrity refers to an accountant’s obligation to be honest in his or her reports and communications with clients. Objectivity is related to independence and refers to an accountant’s responsibility to remain free of conflicts of interest in dealings with his or her clients. The Ethics Center on the IMA’s website includes IMA’s Leadership Strategies and Ethics as well as IMA’s Statement of Ethical Professional Practice, which, like the AICPA, identifies the necessity of integrity and objectivity as necessary characteristics in ethical accounting practice.

If members of either organization are found in violation of these codes, they will be subject to disciplinary action by their organizations, including disbarment from the organization, suspension, and in severe cases, the loss of the license to practice. Accounting professionals are also held to the standards of federal and state legislation regarding accounting principles and practice and are subject to disciplinary action by government organizations.

The microscope on an organization’s ethical standards often highlights it’s financial decisions, and these are a direct result of financial reporting and judgments of accounting professionals. As the focus on ethics in business and the global economy becomes clearer, the ethical codes in accounting become even more significant …

What are the Important Aspects in Accounting and Bookkeeping?

Accounting and bookkeeping starts right from the debit and credit. Debit and credits are the fundamentals of accounting. Without this debit and credit nothing can be accomplished in accounting.

In simple words debit means expenditure and credit means revenue. Whenever an organization is making payments it means the organization is debiting some amount. Similarly when an organization is getting some revenue it is said that the organization is getting credit.

Both these debit and credit should be supported with the proper head of account. In accounting principles head of account plays crucial role along with the payment or receipt in an organization. It means segregating the payment and receipt as per accounting principles with relevant head of account.

Normally when a payment is made from an organization it should be supported by a document which is called payment voucher. Similarly when a receipt is received in an organization it should be supported by a document which is called receipt.

Payment vouchers are the basis for maintaining cash book. Cash book is the consolidated record for every payments made in the organization. Cash book is the source for maintaining general ledger. All receipts and payments in an organization should be posted into the general ledger head of account wise.

General ledger is another important document in accounting. Through the balances arrived in the general ledger trial balance is constructed. Trial balance is an abstract of expenditures and receipts in an organization with relevant head of account wise. Normally trial balance has to be constructed every month. An annual trial balance has to be constructed at the end of every financial year.…

The Importance Of Research- Why We Do Research

We must first understand what research is.  It is another word for gathering of information.  The more information we have the closer we get of making our own decision.  Research is the result of advancing knowledge created in the past.  There are people from all walks of life that contribute to gathered information.  These are ordinary people and extraordinary people.  They include, teachers, students, scientists, professors, scholars, business owners, librarians, book keepers, writers, politicians and many more unknown out there.  These are everyday citizens we interact with.  They all help with the flow information that people use for self help.

Research is designed to solve a particular existing problems so there is a much larger audience eager to support research that is likely to be profitable or solve problems of immediate concern.  We also must understand how research impact our decision making.  Most people make decisions without gathered informations to back them up.  Only few do.  The problem is most people aren’t patient enough to put in the effort.  Research requires time, effort, and sometimes money to have the evidence you need to make a sound decision that’s why many avoid it.  The research you do and evidence you gathered will have impact on your future.  Be adviced, considered the risks or consequences of making an important decision with inadequate evidence.

In conclusion research is very vital to our everyday decision making.  It arms you from wrong informations and save time and money.  It is important to your success as you take on life’s challenges and career decisions making.  But be careful though, becasue too much research without action on what you’ re learning is not good either.  The question is how much information is enough?  How much information can you afford?  Information obesity can be research problem just my advice.  Research plus action will most likely guarantee a successful research.  Now go out there and make good decisions.  I wish you success.  To learn more about taking charge of your future go to my resource box at http://www.unlimited-mlmwealth-online.com Email: prince@unlimited-mlmwealth-online.com cell: 612-363-7576…

Why Study Accounting

For those who don’t know, Accounting is the language of business and is needed now more than ever before.  It is the backbone of all businesses and therefore is a very broad subject.  Today, there are more CEOs with degrees in accounting than any other area of study.  College students that are unsure which area of business they would like to study should seriously consider accounting.  Career opportunities associated with a degree in accounting are practically endless due to how broad the subject is.  Job opportunities include public accounting, government, private industry and forensic accounting.  There are also opportunities in tax preparation, cost management and even jobs with the FBI.  Accounting opportunities are not limited to the ones named above.  

Another reason college students should consider studying accounting is the condition of the economy.  Due to the recession that our economy is going through, many industries are cutting down on jobs.  One area of business that is still thriving is accounting.  Various businesses are realizing how important it is to cut down on costs to make their business more profitable during this time of economic crisis.  They also realize how important it is to have strict set of internal controls to make their business more efficient.  The only way to ensure that both of these can happen is through stringent accounting.  After reading this it should be no surprise that accounting jobs may be on the rise. 

According to the American Institute of Certified Public Accountants, 91% of accounting firms expect hiring to increase or at least remain the same.  This is great news for college graduates who are seeking a career in accounting.  So many college students have been worried that they may not have a job when they graduate due to today’s economic crisis.  With a steady rise in unemployment it is comforting to see that there is still a high demand for accountants. 

Job opportunities are not the only reason that college students should consider accounting.  The job can be very rewarding as well.  The average salary for accountants as of March 9, 2009 is $51,000.  This salary can change based on company, location and industry. 

Internal controls are important for a business to control internal theft.  Without a good set of internal controls it would be too easy for employees to steal cash or even merchandise.  An important aspect of internal controls that is important is separation of duties.  This means that no one person performs all the jobs of a company.  This ensures that one person checks someone else’s work making it difficult to fabricate accounting data to steal money from the company.  Accounting provides a basis for these controls and checks to see if they are being enforced. 

With accounting frauds becoming more and more of a problem there is more of a demand for people with accounting knowledge in the FBI.  They need people who are able to decipher financial statements and pick out bad accounting form in order to uncover sophisticated accounting …

How to Prevent Fraud in Accounting

Fraud prevention is an important part of protecting any business. A business is an investment, and without safeguards to protect it, the business is vulnerable to criminal activity that could, potentially, ruin it. For this reason, fraud prevention is a crucial part of any business model.

The first and most important step to prevent fraud is to know who you are working with.  Employee references must be checked; without having positive feedback from reliable references you should not trust any employee with your business, with your investment.

To prevent fraud, the business must establish a clear understanding of what is and what is not acceptable. Each employee needs to be explicitly told the rules; the business must not allow for any gray areas when it comes to policy and procedures. Not only will this make it easier to detect criminal activity, it will also prevent accidental mistakes from being made. If every employee is comfortable with what the company expects of them, they will be less likely to make a mistake and less likely to try to hide criminal activity from other employees.

There are many ways to commit fraud in accounting, and one of the ways to prevent it from happening is to implement procedures that will make it easier to detect dishonest activity. For example, use checks numbered sequentially so that each check can be accounted for. Enforce procedures that involve more than one employee being present, such as when a deposit is made or when money is counted.

In addition to this, secure and sensitive documents, such as payroll and bank statements, should be controlled. This will help keep important financial information from falling into the wrong hands. You may consider getting a separate post office box or address for sensitive documents, which would help limit the amount of people who have access to them.

To further prevent fraud in your accounting department, the work of the select people who handle secure and sensitive documents should be reviewed by a third party. This third party should not have an investment in the work in question and should be able to spot any mistakes, whether they are accidental or warning signs of fraud. An effective way of doing this is to hire an accountant. This will safeguard your business by not only bringing in a third party, but by bringing in a third party that has experience and knowledge that will protect your business.

Regardless of how you choose to protect your investment, make sure that fraud prevention is a key concern when drafting your policies and procedures.…

Why Is Accounting So Important?

The significance of accounting has never been more apparent than in today’s market, with the struggling economy and the job market in decline.  Though the loss of jobs may be happening in many fields the one that continues to stay strong is accounting.  The reasons for this are the same reasons that accounting is such an important aspect in the economy and in society.

                Before we can begin to understand the importance of accounting, we first must understand what accounting is.  Accounting can be defined as the theory and system of setting up, maintaining, and auditing the books of a firm.  It is the art of analyzing the financial position of a business through its sales, purchases, and overhead.  These records must be kept in chronological order and must be summarized in a useful format.   It is also responsible for identifying information on the transactions, analyzing it and then interpreting each and every document.

                Now that we have begun to understand what accounting means we can begin to examine how important accounting really is.  The first way in which it is important is that an accounting education can be applied to any job industry.  For instance a secretary uses accounting in managing a company’s check book.  Also the executives of this same company must be able to analyze the success of their business through analyzing the accounting statements from the past and present.  These are just two of the many job positions found in any company that must have some knowledge of accounting.  Another reason that accounting is important to all business majors is because of the fact that the business world has now come under much scrutiny.  As a result they are held much more accountable for their financial practices.  This has occurred because of the events of the Enron and WorldCom scandals.  For this reason nearly all businesses require their employees to have a general knowledge of accounting.

                Another way in which accounting is such an important aspect to any business is that accountants are responsible for providing information that is used to determine the present and future economic stability of the organization.  It has been proven that these companies that use good accounting practices have a competitive advantage over their opponents.  Also they have the ability to improve their decision making abilities.   Those that do not use these practices face an inability to compete in the market and make their decisions simply on a hunch.

                Not only is accounting very important in the business world it is also beneficial for ordinary people to know as well.  Each and every person uses these accounting skills in their daily lives when making financial investment decisions.  They also use it when assessing their interest rates in order to pay off their house mortgages.  The final way in which they can use these skills is to balance their check books and to calculate the rates of their car payments.

Within the accounting department can be found the forensic accountants these are …

The importance of managerial accounting in the workplace

Managerial accounting is concerned with the use of economic and financial information to plan and control many activities of an entity and to support the management decision course. Management accountants play important roles more specifically in planning & coordination with production, marketing and financial functions. A subset of the managerial accounting profession is cost accounting which relates to the determination and accumulation of products, processes, or service costs. Management and cost accountants are focused on the internal aspects of a business to keep it efficiently running and profitable.

Managerial and cost accountants use a lot of the same data used by financial accountants. The difference lies in the fact that the data used for managerial accounting is more likely to be used for a future orientated purpose whereas the financial accounting process is showing what has already taken place. Examples of future orientated planning are budgets, benchmarking, and profit projecting. This also means that managerial accountants can take a more proactive approach when it comes to tackling business and economic troubles that can and due arise for many companies.

Planning is a key part of the management process and although there are many descriptions of that process, a generally accepted definition would include reference to the process of planning, organizing and controlling businesses’ activities so that the organization can achieve its desired outcomes. Being able to anticipate what revenues will be and forecasting the expenses that will be incurred to achieve those revenues are critical activities in the budgeting process. That ability is crucial to many aspects of a company and allows employees’ to make more educated business decisions.

The internal orientation that management accountants have to their companies differs from the predominantly external orientation of financial accounting. Financial accounting is more externally important to such people as investors and shareholders. Management accountants work hand and hand with other internal departments such as merchandising, accounting, marketing, web and more. An example of this would be a managerial accountant working with a merchandiser to figure out how many units of a garment they can purchase in the next year and still have a good profit margin.

The benefit of management accounting is that it is not constrained by generally accepted accounting principles, which means that approximate results can be generated quickly for decision-making activities.  Which means while accuracy is valued in the data, relevance is more important for managerial accounting reporting. This is also helpful because it allows the managerial accountant to adapt to different economic climates, business strategies and departments changing needs.

In order to become a managerial accounting professional a bachelor’s degree with a major in accounting is usually a requirement.  A management accountant should possess great analytic and people skills since they will be dealing with many different people and departments in a professional role. A management accountant may also become a Certified Management Accountant (CMA) by passing a respective board four-part test. The CMA examination is given in a computer-based format using objective questions only. In addition …

Dynamic Culture of Accounting Profession

Dynamic Culture of Accounting Profession

Sean Lowery

Cost Accounting 303

October 25, 2009

In the business world, the Accounting profession has been referred to by many as the “language of business.” The field is defined as the study of how businesses track their income and assets over time. Duties involve preparing financial statements, computing costs, and developing certain tax strategies. Accountants, today, work as consultants in business. They advise management in many different financial decisions and are involved in many business transactions.  An accountant must possess a wide variety of skills. Analytical skills, computer skills, and communication skills are all necessary to have in the profession.  The changing atmosphere of the accounting profession has resulted in a more demanding curriculum, but allows for many diverse job options in accounting.

Accounting has undergone many changes over the past several decades that have changed the field drastically. Globalization is a key factor that changed the profession and how it is defined. Since many companies are now going overseas, the need for a set international standard of accounting is needed. For example, more investors are looking overseas for possible investment opportunities, so reliable information from an international company is needed.  Accounting professionals must keep up with globalization by providing more accurate and up-to-date information.  They must understand foreign companies’ business practices and business laws. Another factor that contributes to the changing environment of the field of Accounting is the increase regulations and government control. Financial accounting usually is overseen by the Federal Accounting Standards Board, FASB. Accountants must also conform to the principles which are outlined in the Generally Accepted Accounting Principles, GAAP. In the past decade, a handful of incidents have called for changes in regulations. Major scandals include the incident of Enron and TYCO electronics. In response to these scandals, the federal government has created the Sarbanes Oxley Act. This law set new standards that would enhance companies’ reliability and accuracy in their financial reporting. Many aspects of the legislation provided significant changes, particularly in how auditing is conducted. These changes call for companies to spend millions of dollars to keep in compliance of the new legislation. The Sarbanes-Oxley Act of 2002 also allowed for changes that greatly affects internal users such as managers and executives.  New industries have also called for major changes in the Accounting profession.  In the future, changes will occur that will increase the outlook for accounting majors. Many current accountants are retiring or a few years away.

The accounting field is increasingly becoming more demanding. To keep up with the dynamic culture of accounting, the curriculum and standards for accounting has become stricter. The highest certification for an accountant is passing the Certified Public Accountant exam, CPA. This rigorous exam is composed of four parts, which include auditing, financial accounting and reporting, regulation, and business environment. Before, people gained the certification by simply passing the four part exam. However, in the past decade, new requirements have been set before a person can sit for the exam. …