Non Profit Organization Accounting

Certainly, proper accounting is essential for non-trading institutions. These concerns maintain, generally, a cash book and later they prepare a summary of cash transactions appearing in the cash book. This summary takes the form of an account known as receipts and payments account.

Such concerns also prepare 'income and expenditure account' (which is more or less on the lines of profit and loss account) and the Balance Sheet.

Accounting

The day-to-day accounting consists of maintaining.

Non Profit Organization Accounting

(i) Cash book for recording receipts and payments, and

(ii) Ledger for classification of transactions under proper heads.

Receipts and payments account

It is a summary of cash book for a given period, but the Receipts and Payments account shows the totals of cash transactions under different heads. All the receipts, be cheque or cash are entered on the debit (receipts) side (as in cash book) whereas all the payments (both by cheque or cash) are shown on the credit (payments) side. Following features of the receipts and payments account will help to identify its nature clearly :

1. It is a summary of cash book, like a cash book, receipts are shown on the debit side and
payments on the credit side.

2. Cash and bank items are merged in one column. That means receipts in cash as-well-as by , cheque are entered in one column on debit and payments in cash as-well-as by cheque are entered in one column on credit side. Contra entries between cash and bank get eliminated.

3. It is not a part of double entry book-keeping. It is just a summary of cash book which is a , part of double entry system.

4. Just like cash book, it starts with the opening balance of cash and bank and closes with the closing balance of cash and bank.

5. Both revenue and capital receipts and payments are recorded in this account. For example, ...An organization that is exclusively set up to carryon with the object of carrying out social service or promo & organization of social activities, is a non-trading enterprise. payment for rent and payment for building and machinery both are recorded on its payments side. Similarly, receipts on account of subscription and machinery are shown on the receipts side.

6. Usually, it shows a debit balance which represents cash in hand and at bank. However, in case of bank overdraft, which is larger than cash in hand, the account will show a credit balance.

7. Receipts and payments account fails to disclose gain or loss made by the concern during the period because (a) it is prepared on actual receipt basis i.e. it records all receipts-irrespective of the period to which it relates (previous year, current year or future), (b) it also ignores the nature of the receipts and payments (whether capital or revenue). I

8. Accounting concept of gain or loss is based on "accrual concept" which by its very nature "receipts and payments account" is not capable of considering. Therefore, fails to disclose gain or loss (earned or suffered by the concern) during the period. For example, this account ignores: !

(i) Decrease or increase i.e. depreciation or appreciation in the value of assets;

(ii) Increase or decrease in the value of stock;

(iii) Provision for expenses incurred but payments not made-outstanding expenses.

(iv) Accounting for payment in advance for the services to be utilized in the next accounting period-prepaid expenses.
It also fails to distinguish between:

(v) Capital and revenue payments-whether expenditure or purchase of an asset, and

(vi) Business charge and appropriation- whether business expenditure or drawings.

Limitations of receipts and payments account

Receipts and payments account suffers from following limitations :

(a) It does not show expenses and incomes on accrual basis.

(b) It does not show whether the club or society is able to meet its day-to-day expenses out of its incomes.

(c) It does not show expenses on account of depreciation of assets.

(d) It does not explain the details about many expenses and incomes. In order to explain such questions, treasurer of the club prepares 'Income and expenditure account' and balance sheet.

Income and expenditure account

This account is prepared by non-trading concerns who want to know if during the financial year their income has been more than their expenditure i.e. profit or vice versa ( i.e. loss). Since the object of these concerns is not primarily to' earn profit, therefore, they feel shy in giving it the name of profit and loss account. Because the word 'profit' is a taboo which any society 'looks down upon'. Of course, it discloses whether the concerned institution earned or lost.

It is equivalent to and serves the purpose of 'profit and loss account'.

It is prepared on "accrual basis" (not on receipt basis) meaning thereby that all incomes are to be included which have been earned in the relevant period (whether actually received or not). Similarly, it includes all expenses incurred in the relevant period (whether actually paid or not). This account serves exactly the purpose which 'profit and loss account' serves in a trading concern. On the pattern of 'profit and loss account' income is shown on the credit side and expenditure on the debit side. It also distinguishes between 'capital & revenue' items i.e. it does not take into consideration capital items {both receipts and payments). It follows double entry principles faithfully.

Balance Sheet

The balance sheet of a non-trading concern is on usual lines. Liabilities on left hand side and assets on right hand side. In trading concerns, excess of assets over liabilities is called 'capital'. Here, in non-trading concerns, excess of assets over liabilities is called 'capital fund'. The capital fund is built up out of surplus from income and expenditure account.

Distinction between "receipts and payments account" and "Income and expenditure account" :

Receipts and Payments Account

1. It is a real account.

2. It need not be accompanied by a balance sheet.

3. It is like a cash book.

4. Closing balance is carried forward to the next period.

5. Debit side is for receipts and credit side is for payments.

6. Closing balance represents cash in hand and at bank.

7. It includes both capital and revenue items.

8. It usually shows a debit balance.

9. It ignores outstanding items.

10. It ignores credit sales and purchases.

11. It includes prepaid items.

12. It begins with a balance.

13. It includes items relating to past, present or future periods.

14. It is not a part of double entry system.

15. It ignores non-cash items like depreciation, bad debts etc.

Income and Expenditure Account

1. It is a nominal account.

2. Must be accompanied by a balance sheet.

3. It is like a profit & loss account.

4. Closing balance is merged into capital fund.

5. Debit side is for expenses and credit side for incomes.

6. Closing balance represents either surplus or deficiency.

7. It includes only revenue items.

8. It may show a debit or credit balance.

9. It records outstanding items.

10. It records credit sales and purchases.

11. It excludes prepaid items.

12. It does not begin with a balance.

13. It includes items relating to current period only.

14. It is a part of double entry system.

15. It records non-cash items like depreciation, bad debts etc.

Peculiar items of non-trading concern's

Generally, in the exercises, the instructions are given as to the treatment of special items. Such instructions are based on the rules of the concern. These should be followed while solving the question. In cases, where no specific instructions are given, the following guidelines may be considered:

1. Legacy

It is the amount received by the concern as per the 'will' of the 'donor'. It appears
on the receipts side of receipts and payments account. It should not be considered as income but should be treated as capital receipt i.e. credited to capital fund account.

2. Subscriptions

The members of the associations, as per rules, are, generally, required to make
annual subscription to enable it to serve the purpose for which it was created. It appears on the receipts side of the receipts and payments account and is, usually, credited to income. Care must be exercised to take credit for only those subscriptions which are relevant.

3. Life membership fees

Generally, the members are required to make the payment in a lump sum only once which enables them to become the members for whole of the life. Life members are not required to pay the annual membership fees. As 'life membership fees' is a substitute for 'annual membership fees', therefore, it is desirable that life membership fees should be credited to a separate fund and fair proportion be credited to income in subsequent years. In the
examination question, if there is no instruction as to what proportion be treated as income then whole of it should be treated as capital.

4. Entrance fees

This is also an item to be found on the receipts side of receipts and payments account. There are arguments that it should be treated as capital receipt because entrance fees is to be paid by every member only once (i.e. when enrolled as memer, hence it is nonrecurring in nature. But another argument is that since members to be enrolled every year and receipt of entrance fees is a regular item, therefore, it should -be credited to income. In the absence of the instructions anyone of the above treatment may be followed but students should append a note justifying their treatment.

5. Sale of newspapers, periodicals, etc.

As the old newspapers, magazines, and periodicals etc. are to be disposed of every year, the receipts on account of such sale should be treated as income, and therefore, to be credited to income and expenditure account.

6. Sale of sports material.

Sale of sports material (used) is also a regular feature of the clubs. Sale proceeds should be treated as income, and therefore, to be credited to income and expenditure account.

7. Honorarium

Persons may be invited to deliver lectures or artists may be invited to give their performance by a club (for its members). Any money, paid to invitees, is termed as honorarium and not salary. Such honorarium represents expenditure and will be debited to income and expenditure account.

8. Special fund

Legacies and donations may be received for specified purposes. As discussed above, these should be credited to special fund all expenses related to such fund are shown by way of deduction from the respective fund and not as expenditure in income and expenditure account.

9. Sale of old asset

It is a non-recurring item. It cannot be taken to income and expenditure account. It leads to reduction in asset. Therefore, it is shown by way of deduction from the concerned asset. It is important to note that it is the "book value" that is to be deducted from asset. Profit or loss in such a case is taken to income and expenditure account. Where the book value of asset is nil, the entire proceeds of sale be treated as income.

10. Specific Donations

These are received for specific purpose. For example: Donation for building; Donation for prizes; Donation for pavilion etc. These are capital receipts and shown on liabilities side. It is worthy to note that such donations should not be treated as income because if they are taken to income and expenditure account, it will increase income. The increased income may be utilized for any other purpose. Thus, the purpose of donation will not be served. Such donations appear on the liability side because they create a long term obligation (liability) on the institution. For example a donor may wish that prizes may be awarded year after year out of the income earned on his donations. Such a donation account can't be closed within a year by transferring to income and expenditure account.

11. General donations

These donations are not for any specific purpose and being a recurring income they are to be treated as income and are shown on the income side of income and expenditure account.

12. Endowment fund

It represents donation for a specific purpose. Here, the object of the donor is to provide a source of permanent income to the institution. Thus, it is shown in the liability side of balance sheet. Any income earned during the year in such fund is added to it and any expenditure incurred during the year is deducted from it.

13. Proceeds of concerts, lectures and dramas or cultural shows

A concert is a program of musical entertainment. Concerts and lectures of eminent personalities are arranged in aid of charitable Accounts of Non-Trading institutions. Amount in the income side of institutions. Amount collected from such shows by sale of tickets is an income of institution and shown in the income side of income and expenditure account.

14. Govt. grants. These grants are of two types :

(i) Maintenance grants; and

(ii) Development grants.

The maintenance grants are for meeting recurring expenses. These are treated as income and shown in the income side of income and expenditure account. The development grant is for acquiring assets. A development grant is a liability.

15. Accumulated (Capital) Fund

All entities, profit seeking on non-profit seeking require money for carrying out their activities. In business organization such money is called capital while in case of non-profit organizations it is known by various names such as Capital fund or Accumulated fund.

It represents the surplus of assets over outside liabilities of the organization. It is usually made up by special donations; legacies; capitalization of admission fee ; life membership fee etc. It is increased (or decreased) by any surplus (or deficit) on the Income and Expenditure account. Some of the lesser known names given to this item are General fund or Surplus account.

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Adjustments of Final Accounts

To ensure that the final accounts disclose the true trading results, it is necessary to lake into account the whole of the expenses incurred, whether paid or not, and whole of the losses sustained. Likewise the incomes and gains earned, whether actually received or not, during the period covered by the trading and profit and loss account under consideration must also be recorded.

In mercantile system of accounting, it is essential to adjust different accounts before the preparation of final accounts. It is quite common to adjust expenses paid in advance, incomes received in advance, income accrued but not received, bad debts, provision for bad debts depreciation on assets and soon. Journal entries are passed to effect the required adjustments, these entries are known as adjusting entries.

Accounting

Usual Adjustments

Adjustments of Final Accounts

Outstanding Expenses

Certain expenses relating to a particular period may not have been paid in that accounting period. All such expenses which are due for payment in one accounting year but actually paid in future accounting years or payment of which is postponed are all outstanding or unpaid expenses. All such expenses must be accounted for in that accounting year in which they are incurred, irrespective of the fact whether they are paid or not. In other words, all paid and also unpaid expenses must be recorded in an accounting year if they relate to that accounting year only with a view to ascertain true trading results e.g. if salaries for the last month are not paid, no entry will appear in books of accounts unless these are paid. So profit and loss account in respect of salaries will thus be under charged than the actual expenditure, therefore the profit will be more.

Prepaid Expenses

The, benefit of some of the expenses already spent will be available in the next accounting year also, Such a portion of the expense is called pre-paid expense; since such expenses are already paid, they are also recorded in the books of accounts of that period to which they do not relate. The result shown by the final accounts of a particular period will not be correct because such expenses relate to future periods. Therefore, such prepaid expenses must be adjusted in the books of accounts to arrive at true profit. Generally insurance, taxes, telephone subscriptions, rent etc. are paid in advance, thus requiring adjustment e.g. Rent paid by x for one year on 1.7.79 when his accounting year is calendar year; thus rent for 6 months will remain unexhausted and will be c/f to the next year.

Accrued Income

There may be certain incomes which have been earned during the year but not yet received till the end of the year. Income like interest on investments, rent and commission etc. are normally earned by merchant during a particular accounting period but actually not received during that period. Such income items need adjustments before the preparation of final accounts. Such incomes should be credited to that particular income account. At the same time the income so -earned but not received is an asset because the amount is still to be received.

Income Received in Advance

Sometimes, traders receive certain amounts during a particular trading period which are to be earned by them in future periods. Such incomes though actually received and therefore, recorded i.e. not yet earned. Such incomes should be credited to the profit and loss account of the year in which these are earned. Therefore, such income though received is not the income but a liability of that period

Closing Stock

It represents the unsold stock at the end of the year. Closing stock is valued and following entry is passed at the end of the year: Closing Stock account To Trading Account Closing stock at the end appears in the balance sheet and is carried forward to the next year. At the end of the next year it appears in the trial balance as opening stock and from there it is taken to debit side of trading account and thus closed.

Depreciation

The value of fixed assets diminishes gradually with their use for business purposes. Although this decrease in the value happens every day but its accounting is done only at the end of accounting period with the help of following entry :Depreciation account To Particulars asset

Interest on Capital

The proprietor may wish to ascertain his profit after considering the interest which he losses by investing his money in the firm. Interest to be charged is an expense for the business on one hand and income to the proprietor on the other hand. Following adjusting entry is recorded at the end of accounting period: Interest on capital a/e To Capital a/c Interest on capital being an expense is debited to profit and loss account and same amount of interest on capital is added to capital.

Interest on Drawings

As business allows interest on capital it also charges interest on drawings made by the proprietor. Interest so charged is an income for the business on one hand and expense for the proprietor on the other hand. Following adjusting entry is passed at the end. of accounting period: Capital ale Dr. To Interest on drawings a/e The interest on drawings being an income is credited to profit and loss account is shown as a deduction from the capital.

Bad Debt to be written off

Bad debts are irrecoverable debts from customers, during the course of the financial year. These are recorded as follows: Bad debts a/c To Sundry Debtors a/c It results in the reduction of customers debit balance and addition to the loss i.e. Bad Debts. At the end of the year when the trial balance is drawn, these two accounts show debit balances. The balance on sundry debtors account, thus arrived, is the net balance, after deduction of any bad debts recorded during the year. But after the trial balance is prepared and before the final accounts are drawn trader may find that there are additional bad debts. Such bad debts must be recorded with the same adjusting entry and giving it following effect in ledger and final accounts.

Provision for Bad Debts

At the end of the year, after writing off the bad debts about whom we were sure of becoming irrecoverable, there may still be some customer balances from whom it is doubtful to collect the entire amount. However, it cant be written off as bad because non-recovery of such amount is not certain. But at the same time the balance in sundry debtors account should be brought down to its net realizable figure so that balance sheet may not exhibit the debtors at more than their actual realizable value. Therefore, to show the approximately correct value of the sundry debtors in the balance sheet a provision or reserve is created for possible bad debts. Such an adjustment entry is recorded at the end of accounting year.

Provision for bad debts is an attempt to anticipate possible losses due to bad debts and to keep aside an amount out of profit to meet the loss estimated in the following years. When the provision for bad debts is created, following entry is recorded:

Profit and Loss A/c Dr. To Provision for bad debts A/c

Some important considerations while creating provision for bad debts

(i) Sundry debtors account should not be credited with the amount of provision for doubtful debts because the loss has not actually been incurred.

(ii) Treatment of bad debts or provision for bad debts appearing inside the trial balance. If some balance (credit) is already appearing in provision for doubtful debts account inside the trial balance, it is the previous years unutilized balance of this account. If some bad debts are also appearing on the debit side of the trial balance, these should be transferred to provision for bad debts account, with the help of following entry: Provision for bad debts a/e To Bad debts a/e. It is important to note that, as these items appear inside the trial balance, so these are to appear only in profit and loss account as debtors have already been reduced during the year.

(iii) When bad debts and provision for bad debts appear in trial balance, new provision is to be created and further bad debts are to be written off. If already bad debts and provision for bad debts are appearing in trial balance, these should be adjusted and only difference should be taken to profit and loss account.

If bad debts written off plus bad debts to be written off plus new provision for bad debts is more than the credit balance of old provision appearing in the trial balance, the difference should be debited to profit and loss account.

Provision for discount on Debtors

It is normal practice in trade to allow discount to customers for prompt payment and it constitutes a substantial sum. Sometimes the goods are sold on credit to customers in one accounting period where as the payment of the same is made by them in the next accounting period and so discount is to be allowed. It is a prudent policy to charge this expenditure to the period in which sales have been made, so a provision is created in the same manner, as in case of provision for doubtful debts

An important point to note is that no discount win be allowed on debts that become bad. Therefore, the provision required for discount will be in respect of the other debts only. So the amount of provision for discount be calculated after deducting the provision for bad debts from sundry debtors.

Provision for discount on creditors

Prompt payment, if made, enables a businessman to receive discount. The question arises whether this discount should be treated as income of the period in which purchases were made or of the period when the payment is made, if both events are in different accounting years, it has been well decided by accountants that it should be treated as income of the period in which purchases are made. So on last date of accounting period if some amount is still payable to creditors, a provision should be created for such probable income and amount should be credited to the profit and loss account of that year in which purchases are made. Following adjusting entry is passed for it :Provision for discount on creditors a/c Dr. To Profit and loss account

Losses by Accidents

Sometimes a business suffers certain losses not because of trading but because of certain accidents. These may destroy some fixed assets of the merchant. In such a case the asset account is credited and the profit and loss account is debited.

If goods (stock-in-trade) are lost by accident the value of closing stock win be lower than otherwise. This will reduce the amount of gross profit. So the cost of goods lost by accident is credited to the trading account and debited to the profit and loss account. The increase -in gross profit will be neutralized by the debit to the profit and loss account and thus the net profit will not be effected. The entries to the passed are as follows: Loss by accident a/c To Goods lost by accident a/c

Commission to manager payable on profits

Sometimes the manager is entitled to a commission on profits.. Such commission may be :

(a) Fixed percentage on net profits before charging such commission.

(b) Fixed percentage on net profits- after charging such commission.

Such commission being an expense is debited to commission account. However, as it has not yet been paid, so commission payable account is given the credit and finally it is shown in the balance sheet as a liability. Calculation of Commission First of all trading account should be prepared in usual manner and after transferring the gross profit or loss all expenses and incomes should be debited or credited except the commission which is still to be calculated.

Goods used in business

Sometimes goods purchased for the purpose of resale are used in business as giving them away for charitable purpose or distributing them as free samples. In these conditions purchases account should be credited with an amount equal to the cost of goods used in business and same amount is debited to charity or advertisement expenses account, as the case may be.

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The Types Of Accounting

Accounting is the art of analyzing and interpreting data. It may not be apparent to some but every business and every individual uses accounting in some form. An individual may knowingly or unknowingly use accounting when he evaluates his financial information and relays the results to others. Accounting is an indispensable tool in any business, may it be small or multi-national.

The term "accounting" covers many different types of accounting on the basis of the group or groups served. The following are the types of accounting.

Accountant

1. Private or Industrial Accounting: This type of accounting refers to accounting activity that is limited only to a single firm. A private accountant provides his skills and services to a single employer and receives salary on an employer-employee basis. The term private is applied to the accountant and the accounting service he renders. The term is used when an employer-employee type of relationship exists even though the employer is some case is a public corporation.

The Types Of Accounting

2. Public Accounting: Public accounting refers to the accounting service offered by a public accountant to the general public. When a practitioner-client relationship exists, the accountant is referred to as a public accountant. Public accounting is considered to be more professional than private accounting. Both certified and non certified public accountants can provide public accounting services. Certified accountants can be single practitioners or by partnership ranging in size from two to hundreds of members. The scope of these accounting firms can include local, national and international clientele.

3. Governmental Accounting: Governmental accounting refers to accounting for a branch or unit of government at any level, may it be federal, state, or local. Governmental accounting is very similar to conventional accounting methods. Both the governmental and conventional accounting methods use the double-entry system of accounting and journals and ledgers. The object of government accounting units is to give service rather than make profits. Since profit motive cannot be used as a measure of efficiency in government units, other control measures must be developed. To enhance control, special funds accounting is used. Governmental units can use the services of both private and public accountant just as any business entity.

4. Fiduciary Accounting: Fiduciary accounting lies in the notion of trust. This type of accounting is done by a trustee, administrator, executor, or anyone in a position of trust. His work is to keep the records and prepares the reports. This may be authorized by or under the jurisdiction of a court of law. The fiduciary accountant should seek out and control all property subject to the estate or trust. The concept of proprietorship that is common in the usual types of accounting is non-existent or greatly modified in fiduciary accounting.

5. National Income Accounting: National income accounting uses the economic or social concept in establishing accounting rather than the usual business entity concept. The national income accounting is responsible in providing the public an estimate of the nation's annual purchasing power. The GNP or the gross national product is a related term, which refers to the total market value of all the goods and services produced by a country within a given period of time, usually a calendar year.

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Get to Know the Different Accountancy Jobs

If you're planning to pursue a career as an accountant, it helps to know the major fields in accounting to give you a clear picture of what's expected of you and whether or not you're qualified for accountancy jobs. They'll also serve as your guide once you've finally decided to enter the accounting world.

• Public Accounting
A certified public accountant is one who performs all kinds of accounting, auditing, and consulting services to clients. If you specialize in public accounting you're expected to deal with tax concerns like helping businesses and individuals in processing income tax returns. Another specialization focuses on health and insurance benefits of employees and auditing or preparing financial statements. Most certified public accountants work in accounting firms while others opt to work on their own.

Accountant

• Management Accounting
Management accountants go by many names such as managerial, corporate and private accountants. As an accountant working for a company, you'll take charge of recording and analyzing all financial-related information including budgeting and cost and asset managements. Yours is an important position in the company so you have to work closely with the executive team and guide them in their decision making especially if it involves planning and interpreting financial details.

Get to Know the Different Accountancy Jobs

• Government Accounting
Working as an accountant in the public sector can be very rewarding. You'll serve as the eyes and ears of the government since you're in charge of examining and auditing financial records of government and private agencies. You have to ensure that they follow tax laws and regulations mandated by the government.

• Internal Auditing/Accounting
This field is very meticulous and requires people who pay close attention to the littlest details. As an internal auditor of a company, you have to check and recheck company records and see to it that they're free from errors, frauds, or mismanagement. You have to review the overall operations of the company and check if they abide by the rules and regulations stipulated in the law. In some cases, you have to conduct environmental, legal, and health care auditing.

Regardless what accounting fields you want to work in, you need a bachelor's degree specifically in accounting or related field to be qualified for accountancy jobs. Other prestigious companies require the expertise of accountants who have passed certification exams or those who have a master's degree in accounting. If you're a Certified Public Accountant, you have better chances of getting hired fast and receive higher salary compared to those who don't have a certification.

Accountants can work as a part of a company or firm or they can work alone as a private accountant. With so many companies and individuals asking for the services of accountants for sure you won't be disappointed in pursuing this career

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Accounting - A Practical Definition

What is accounting?

A simple definition is the recording of financial or money transactions. Not all transactions need to be recorded. Mostly, only business transactions are recorded, personal transactions are rarely recorded by individuals.

Accounting

For example, you purchase a book for . You give the book seller ; you receive the book & a receipt for . More often than not you throw the receipt away; you only want to read the book. The book seller however is operating a business so the transaction will be recorded.

Accounting - A Practical Definition

The book seller will record the as a cash sale and at the end of the day will total all of the book cash sales. That is easy, count the money in the till less the float amount at the start of the day and you have the total sales for the day. The book seller now has a problem, how many books were sold, what books were sold and was there a profit for the day?

Does it matter? It does if the book seller wishes to continue the business. This is where the accounting system or process begins to be a little more complicated.

The book seller now has to figure out a few things. How many books were sold is relatively easy, 45 transactions for the day so 45 books sold today. All at , unlikely, so the book seller needs an accounting system to record or show this information. This accounting system should show what books were sold, at what price and how many were sold.

The book seller needs this information because tomorrow there will be more sales. If there were 10 books titled "Book 1" today and four were sold then tomorrow there will only be six on the shelf. If four more are sold tomorrow, there will be two left for the day after tomorrow. If customers come into the book shop to buy "Book 1" and it is not available they will go somewhere else to get it.

It may take a week to receive more books after an order is made.

So the accounting system must show the book seller when more books need to be ordered not just how many were sold and at what price. In the example "Book 1" the book seller will need more books arriving tomorrow or early the day after so no book sale is lost. The new book order would have needed to be made a week ago for there to be no loss of book sales.

How much did the book seller pay for the books? That information also needs to be available to show whether a profit is being made. The simple transaction of one sale is not so simple for the book seller.

Accounting is far more than the simple recording of a financial transaction. Accounting needs to be able to provide more information than the financial amount of the transaction alone.

A better definition would be accounting is the process of recording all aspects of the money transaction from a financial, physical and non-financial informational point.

Mind you not all transactions are completely money so even the better definition is not complete when it comes to a definition of accounting. Accounting involves so many different areas of business that any definition given is always going to be open to debate, especially amongst accountants.

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How Do You Set Consulting Fees?

One of the most frequent questions I receive
from those who are trying to start or grow
their own consulting business is: "How and
what do you charge clients for your consulting
services?"

The ways of billing clients are numerous.
There are hourly rates, by-the-job fixed rates,
contingency or performance arrangements,
flat fee plus expenses, daily fee plus expenses,
and many other methods of charging for your
consulting services. Which one is best?

Accountant

Let us consider some ways of billing for your
time.

How Do You Set Consulting Fees?

1. Hourly or Daily Rate

Many consultants charge by the hour or day.
To establish an hourly or daily rate, they try
to calculate the number of billable hours in a
year. Many hours will be spent marketing and in
administrative and other functions, so this
time is not chargeable to the client. As well,
vacation time, holidays, sick days, and so on,
can not be directly billed to the client.

Consultants, like other businesses, must charge
enough to cover their overhead expenses and also
earn a profit. If a consultant wants to earn
twenty-five dollars per hour of working time,
he (or she) might have to charge one hundred
dollars per hour to the client. This assumes
one half billable hours and fifty percent
overhead and profit.

Your hourly or daily rate may be limited by
what your competition charges, especially if
you have not positioned yourself as different
from them.

2. Fixed or Flat Rate

Some consultants charge by the job or a flat rate.
For example, a tax consultant might charge three
hundred dollars to prepare a tax return for
you and your spouse, including an unaudited
income statement for your business from information
supplied by you. If the consultant takes only one
hour to do this, he grosses three hundred dollars
per hour. If, though, the tax consultant
miscalculates the time required, he could take
twenty hours to complete the job and make only
fifteen dollars per hour.

Of course, consultants can also make a profit on
the labour of their employees or subcontractors.

Many consultants claim to make more on a flat rate
than on a hourly basis. Advantages include being
able to give a quote to the client up front and
less disputes on price (as the total bill was
agreed upon in advance).

To protect yourself on flat rate assignments,
always limit the scope of your engagement to
something that you can calculate easily.

For example, if you are asked to give a quote
for setting up a website for a business, you
might break this project into smaller assignments.

First, you could give a quote for preliminary
research and recommendations. Estimate the time
required to meet with the client, learn about
his business and goals, develop strategies and a
budget, and prepare recommendations on how to
proceed. Then, give the client a quote (perhaps
in the form of a one page letter agreement or
proposal). Upon acceptance of the offer by the
client in writing, you may proceed with this
phase of the project.

Some consultants collect one-half of their fee
up front and half upon assignment completion for
each phase of the consulting project.

If the client doesn`t like your recommendations,
at least you get paid for the work you did.
Perhaps you can charge him to prepare
alternative suggestions.

If your website project was not broken into
smaller steps or assignments, you could find
that you spent way more time on the project
than anticipated.

Also, you might not find out until you present
your bill for the whole project that your client
won`t pay, either because he is not satisfied
with the results or because he is unable or
unwilling to pay.

Breaking down a project into smaller assignments
helps you estimate more accurately and limits
your financial exposure.

3. Contingency or Performance Arrangements

Sometimes clients will ask you to become their
partner. If you do, you are no longer an
objective consultant.

What if your client asks you to do management
consulting for twenty-five percent of the net
profits? Will there even be any profit by the
time he writes off his car, home office,
entertainment, travel, wages to self and
family members, and other expenses?

On the other hand, if you are a marketing
consultant that is absolutely certain
that you can increase a client`s sales, you
may feel confident charging a fee based on the
increased sales volume of the client. Are you
sure your client will co-operate with you in
the attaining of this goal?

Some consultants charge a flat rate plus a
percentage of ownership or profits for their
services.

Fees based on contingency or performance
arrangements are risky. Most consultants are
better off charging a fair price for their
services and leaving the risk of the client`s
business to the client.

4. Value Based Fees

Sometimes consultants can justify fees based on
their value to the client. For example, if you
save a client one million dollars in taxes, your
fee may be higher than normal to reflect the
value of the services rendered.

You might pay an accountant or lawyer a fee of
fifteen hundred dollars based on time for certain
tax related services. What would you be willing
to pay to legally save an extra million dollars
in taxes? Ten thousand dollars, one hundred
thousand dollars, or more?

Can you apply this information to your own
consulting practice? Is there some particularly
valuable service that you can render that would
justify premium rates?

However and whatever you charge, be sure that
your fee is a good value for your client
and also compensates you fairly.

For further Information and resources about
consulting, visit:
http://www.yenommarketinginc.com/consulting.html

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Joint Venture Principles And Practices

In contrast, they may need to combine their abilities for only a limited period, or only for carrying out a specific project. Because of the relatively short duration of such an association, a permanent arrangement such as a partnership would be unsuitable and unnecessary. In such cases, parties often enter into a more informal type of association known as a joint venture. A joint venture is an association similar to a partnership, but which is entered into for a limited and specific object. These days they are frequently used in large construction projects.

As a result of this latter development, large companies have become involved in 'long-term' joint ventures and suitable accounting accountability of their interests in such ventures has become essential.

Accountant

There are two possible methods of accounting that can be used for such joint ventures: (1) a separate set of accounting books is provided, in the same way as a partnership. In this case no particular accounting problem exists. All transactions are recorded according to the double entry system and an income statement and balance sheet are prepared in the usual manner, (2) a separate set of accounting books is not provided. Because of the relatively short duration of many types of joint venture, separate accounting books are often not provided.

Joint Venture Principles And Practices

In a joint venture each party, by mutual agreement, assumes responsibility for certain specific tasks in order that the objectives of the joint venture may be achieved. For example, one party may purchase certain goods on behalf of the joint venture and send them to another party who is responsible for sales. At specific times (e.g. when the venture has been concluded or at other specific times) each entrepreneur must provide the other parties with a complete financial accounting report of all his transactions on behalf of the joint venture.

In order to do this, each entrepreneur records the transactions that he concludes on behalf of the joint venture in his own accounting books, in a special account in the ledger, 'Joint venture with X'. The accounting report that a joint venturer provides the other joint venturer will be a summary of the transactions recorded in this account. When all parties have submitted their accounting reports to each other, a joint accounting statement is prepared from this information to determine the result of the venture. This joint statement is also known as a memorandum statement and is prepared separately from the relevant accounting reports. It does not form part of the double entry accounting system in any particular set of accounting books.

The profit and loss of the venture as determined from the memorandum statement will be divided in the statement between the entrepreneurs, according to the mutual agreement.

Each entrepreneur will record his portion of the profit and loss from the venture, as determined in the memorandum statement, in the joint venture account in his own accounting books. The debit or credit balance on the account at this stage will represent the amount due by (if a debit balance) or due to (if a credit balance) the other parties in the venture.

Since each entrepreneur records only those transactions that he concluded on behalf of the joint venture and his portion of the profit (loss) in the joint venture account in his accounting books, these accounts in the separate sets of books will have the same balance but on opposite sides. This indicates that the entrepreneur owes the other that amount.

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Accounting For Discounts

A discount is a reduction in the price of goods below the amount at which those goods would normally be sold to other customers of the supplier. Discounts can identified as two parts:

1. Trade Discounts - This is a reduction in the catalogue price of an article, given by a wholesaler or manufacturer to a retailer. It is often given in return for bulk purchase orders.

Accounting

2. Cash or settlement discounts - This is a reduction in the amount payable for the purchase of goods or services in return for payment in cash rather than taking credit.

Accounting For Discounts

Trade Discounts

This is a reduction in the cost of goods owing to the nature of the trading transaction. For example a customer might quoted a price 2$ per unit for a particular item, but lower price of say 0.5$ per unit if the item is bought in quantities of say 200 units or more at a time.

In an accounting trade discounts are recorded in only to the day books, its not transfer to journal.

Cash or Settlement Discounts

This is a reduction in the amount payable to the supplier, in return for immediate payment in cash, rather than purchase on credit. For example a suppler might charge 2000$ for goods, but offer a discount of, say 10% if the goods are paid for immediately in cash.

In an accounting trade discounts are recorded in cash book first and transfer it into journal.

Trade discounts received
It should be deducted from the gross cost of purchase. It is recorded as shown below:

o Total creditors (Debit)
o Discounts received (Credit)
o Cash account (Credit)

At the end of the accounting period received account is transfer to the profit and loss account

o Discounts received (Debit)
o Profit and loss account (Credit)

Trade discounts allowed
It should be deducted from the gross sales price. It is recorded as shown below:

o Cash account (Debit)
o Discounts allowed (Debit)
o Total debtors (Credit)

At the end of the accounting period allowed account is transfer to the profit and loss account

o Profit and loss account (Debit)
o Discounts received (Credit)

Accounting For Discounts Why I Hate Religion, But Love Jesus || Spoken Word Video Clips. Duration : 4.07 Mins.
Rating: 4.5645514

A poem I wrote to highlight the difference between Jesus and false religion. In the scriptures Jesus received the most opposition from the most religious people of his day. At it's core Jesus' gospel and the good news of the Cross is in pure opposition to self-righteousness/self-justification. Religion is man centered, Jesus is God-centered. This poem highlights my journey to discover this truth. Religion either ends in pride or despair. Pride because you make a list and can do it and act better than everyone, or despair because you can't do your own list of rules and feel "not good enough" for God. With Jesus though you have humble confident joy because He represents you, you don't represent yourself and His sacrifice is perfect putting us in perfect standing with God! Facebook: www.facebook.com Video Editor email: matthew@robgroup.com Video website: www.cikproductions.com music by Tony Anderson www.soundcloud.com Website: chiselseason.com Ministry Facebook: www.facebook.com Twitter: twitter.com To contact regarding booking, speaking, etc email with "speaking request" in subject line for easier organization : jeffersonbethke@gmail.com download link to word document of poem: www.box.com Wanna start helping and serving Jesus in a practical way? checkout the company of the watch I am wearing in the video! They give 10-25% of all proceeds to non profits and the bands and faces are interchangeable! www.cruxwatches.com

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Evolution of Accounting

Accounting has been called as the language of business. Accounting is the system which measures business activities. It processes activities in business into reports and communicates the results to top management. Let us now look through the advancement of accounting.

Ancient Accounting

Accountant

As early as 8500 B.C., accounting has already existed. Archaeologists have found clay tokens as old as 8500 B.C. found in Mesopotamia which were usually cones, disks, spheres and pellets. These tokens correspond to such commodities like sheep, clothing or bread. They were used in the Middle West in keeping records. After some time, the tokens were replaced by wet clay tablets. During such time, experts concluded this to be the starts of the art of writing. Examples of ancient civilizations keeping account records are China, Babylonia, Greece and Egypt. Like in Babylonia during 3600 B.C., payments of salaries were recorded in clay tablets. In addition, the rulers of these civilizations keep track of labor and material costs used in building structures using accounting. A good example is the case of the Egyptian pharaohs in building their magnificent pyramids.

Evolution of Accounting

Middle Ages

During the thirteenth to the fifteenth centuries, trade flourished places such as Florence, Venice and Genoa, thus, there was advancement in account keeping methods, thanks to the merchants and the bankers of such time. during the 1211 A.D., one of the systems in accounting was kept by a Florentine banker. However, the system was primitive as the concept of equality for entries was absent. Double entry records first came out during 1340 A.D. in Genoa. In 1494, the first systematic record keeping was formulated by Fra Luca Pacioli, a Franciscan monk and one of the most celebrated mathematicians to this day. Pacioli is considered as the father of accounting.

Industrial Revolution

The industrial revolution which was characterized by great changes in working and business transactions paved way to the specialized field of accounting called cost accounting in order to meet the need for the analysis of various costs. In addition, since there was a development of the corporate form of organization, there was a need for a separate and independent report to assure the management's financial representations are reliable. Information Age

At present, there have been tremendous advancements in accounting to meet the needs brought about by information technology. Those duties that required manual, tedious and time-consuming methods can now be done using the computers which make work faster, more reliable, accurate and precise. True enough, business transactions have changed and evolved. Businesses can now be transacted virtually making it faster and hassle free. Businessmen transact their businesses without even facing one another has become possible all because of information technology. With the advancement of businesses, accounting has also advanced to meet the needs of businesses at this day. There has been a great quantity of applications and elements of accounting that meet up the various needs of businesses. As they often point out, as a smart businessman, one must breathe in information technology to keep up with the trend and stay competitive.

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Rectification Of Accounting Errors

Accountants prepare trial balance to check the correctness of accounts. If total of debit balances does not agree with the total of credit balances, it is a clear-cut indication that certain errors have been committed while recording the transactions in the books of original entry or subsidiary books. It is our utmost duty to locate these errors and rectify them, only then we should proceed for preparing final accounts. We also know that all types of errors are not revealed by trial balance as some of the errors do not effect the total of trial balance. So these cannot be located with the help of trial balance. An accountant should invest his energy to locate both types of errors and rectify them before preparing trading, profit and loss account and balance sheet. Because if these are prepared before rectification these will not give us the correct result and profit and loss disclosed by them, shall not be the actual profit or loss.

All errors of accounting procedure can be classified as follows:

Accounting

1. Errors of Principle

Rectification Of Accounting Errors

When a transaction is recorded against the fundamental principles of accounting, it is an error of principle. For example, if revenue expenditure is treated as capital expenditure or vice versa.

2. Clerical Errors

These errors can again be sub-divided as follows:

(i) Errors of omission

When a transaction is either wholly or partially not recorded in the books, it is an error of omission. It may be with regard to omission to enter a transaction in the books of original entry or with regard to omission to post a transaction from the books of original entry to the account concerned in the ledger.

(ii) Errors of commission

When an entry is incorrectly recorded either wholly or partially-incorrect posting, calculation, casting or balancing. Some of the errors of commission effect the trial balance whereas others do not. Errors effecting the trial balance can be revealed by preparing a trial balance.

(iii) Compensating errors

Sometimes an error is counter-balanced by another error in such a way that it is not disclosed by the trial balance. Such errors are called compensating errors.

From the point of view of rectification of the errors, these can be divided into two groups :

(a) Errors affecting one account only, and

(b) Errors affecting two or more accounts.

Errors affecting one account

Errors which affect can be :

(a) Casting errors;

(b) error of posting;

(c) carry forward;

(d) balancing; and

(e) omission from trial balance.

Such errors should, first of all, be located and rectified. These are rectified either with the help of journal entry or by giving an explanatory note in the account concerned.

Rectification

Stages of correction of accounting errors

All types of errors in accounts can be rectified at two stages:

(i) before the preparation of the final accounts; and

(ii) after the preparation of final accounts.

Errors rectified within the accounting period

The proper method of correction of an error is to pass journal entry in such a way that it corrects the mistake that has been committed and also gives effect to the entry that should have been passed. But while errors are being rectified before the preparation of final accounts, in certain cases the correction can't be done with the help of journal entry because the errors have been such. Normally, the procedure of rectification, if being done, before the preparation of final accounts is as follows:

(a) Correction of errors affecting one side of one account Such errors do not let the trial balance agree as they effect only one side of one account so these can't be corrected with the help of journal entry, if correction is required before the preparation of final accounts. So required amount is put on debit or credit side of the concerned account, as the case maybe. For example:

(i) Sales book under cast by Rs. 500 in the month of January. The error is only in sales account, in order to correct the sales account, we should record on the credit side of sales account 'By under casting of. sales book for the month of January Rs. 500".I'Explanation:As sales book was under cast by Rs. 500, it means all accounts other than sales account are correct, only credit balance of sales account is less by Rs. 500. So Rs. 500 have been credited in sales account.

(ii) Discount allowed to Marshall Rs. 50, not posted to discount account. It means that the amount of Rs. 50 which should have been debited in discount account has not been debited, so the debit side of discount account has been reduced by the same amount. We should debit Rs. 50 in discount account now, which was omitted previously and the discount account shall be corrected.

(iil) Goods sold to X wrongly debited in sales account. This error is effecting only sales account as the amount which should have been posted on the credit side has been wrongly placed on debit side of the same account. For rectifying it, we should put double the amount of transaction on the credit side of sales account by writing "By sales to X wrongly debited previously."

(iv) Amount of Rs. 500 paid to Y, not debited to his personal account. This error of effecting the personal account of Y only and its debit side is less by Rs. 500 because of omission to post the amount paid. We shall now write on its debit side. "To cash (omitted to be posted) Rs. 500.

Correction of errors affecting two sides of two or more accounts

As these errors affect two or more accounts, rectification of such errors, if being done before the preparation of final accounts can often be done with the help of a journal entry. While correcting these errors the amount is debited in one account/accounts whereas similar amount is credited to some other account/ accounts.

Correction of errors in next accounting period

As stated earlier, that it is advisable to locate and rectify the errors before preparing the final accounts for the year. But in certain cases when after considerable search, the accountant fails to locate the errors and he is in a hurry to prepare the final accounts, of the business for filing the return for sales tax or income tax purposes, he transfers the amount of difference of trial balance to a newly opened 'Suspense Account'. In the next accounting period, as and when the errors are located these are corrected with reference to suspense account. When all the errors are discovered and rectified the suspense account shall be closed automatically. We should not forget here that only those errors which effect the totals of trial balance can be corrected with the help of suspense account. Those errors which do not effect the trial balance can't be corrected with the help of suspense account. For example, if it is found that debit total of trial balance was less by Rs. 500 for the reason that Wilson's account was not debited with Rs. 500, the following rectifying entry is required to be passed.

Difference in trial balance

Trial balance is affected by only errors which are rectified with the help of the suspense account. Therefore, in order to calculate the difference in suspense account a table will be prepared. If the suspense account is debited in' the rectification entry the amount will be put on the debit side of the table. On the other hand, if the suspense account is credited, the amount will be put on the credit side of the table. In the end, the balance is calculated and is reversed in the suspense account. If the credit side exceeds, the difference would be put on the debit side of the suspense account. Effect of Errors of Final Accounts

1. Errors effecting profit and loss account

It is important to note the effect that an en-or shall have on net profit of the firm. One point to remember here is that only those accounts which are transferred to trading and profit and loss account at the time of preparation of final accounts effect the net profit. It means that only mistakes in nominal accounts and goods account will effect the net profit. Error in the these accounts will either increase or decrease the net profit.

How the errors or their rectification effect the profit-following rules are helpful in understanding it :

(i) If because of an error a nominal account has been given some debit the profit will decrease or losses will increase, and when it is rectified the profits will increase and the losses will decrease. For example, machinery is overhauled for Rs. 10,000 but the amount debited to machinery repairs account -this error will reduce the profit. In rectifying entry the amount shall be transferred to machinery account from machinery repairs account, and it will increase the profits.

(il) If because of an error the amount is omitted from recording on the debit side of a nominal account-it results in increase of profits or decrease in losses. The rectification of this error shall have reverse effect, which means the profit will be reduced and losses will be increased. For example, rent paid to landlord but the amount has been debited to personal account of landlord-it will increase the profit as the expense on rent is reduced. When the error is rectified, we will post the necessary amount in rent account which will increase the expenditure on rent and so profits will be reduced.

(iil) Profit will increase or losses will decrease if a nominal account is wrongly credited. With the rectification of this error, the profits will decrease and losses will increase. For example, investments were sold and the amount was credited to sales account. This error will increase profits (or reduce losses) when the same error is rectified the amount shall be transferred from sales account to investments account due to which sales will be reduced which will result in decrease in profits (or increase in losses).

(iv) Profit will decrease or losses will increase if an account is omitted from posting in the credit side of a nominal or goods account. When the same will be rectified it will increase the profit or reduce the losses. For example, commission received is omitted to be posted to the credit of commission account. This error will decrease profits ( or increase losses) as an income is not credited to profit and loss account. When the error will be rectified, it will have reverse effect on profit and loss as an additional income will be credited to profit and loss account so the profit will increase ( or the losses will decrease). If due to any error the profit or losses are effected, it will have its effect on capital account also because profits are credited and losses are debited in the capital account and so the capital shall also increase or decrease. As capital is shown on the liabilities side of balance sheet so any error in nominal account will effect balance sheet as well. So we can say that an error in nominal account or goods account effects profit and loss account as well as balance sheet.

2. Errors effecting balance sheet only

If an error is committed in a real or personal account, it will effect assets, liabilities, debtors or creditors of the firm and as a result it will have its impact on balance sheet alone. because these items are shown in balance sheet only and balance sheet is prepared after the profit and loss account has been prepared. So if there is any error in cash account, bank account, asset or liability account it will effect only balance sheet.

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Users of Accounting Information

Accounting plays a very important role in all businesses but it is not just the business itself that finds accounting information useful. There are other stake holders who rely on accounting information to make decisions. These stakeholders include:

1. Shareholders - Shareholders use the balance sheet and profit and loss account produced by limited companies to decide if they are going to increase or decrease their holding.

Accounting

2. Management - Management in every level of the business from director level to supervisor level rely on accounting information to do their job properly. They all use the same information for different purposes. For example, directors use it for strategic purposes and middle management can use it to see if they are meeting their financial targets.

Users of Accounting Information

3. Suppliers - Along with other data suppliers will look at a company's balance sheet and profit and loss account to see if and how much credit they are willing to give to present and potential customers.

4. Lenders - Similar to suppliers lenders also need to make sure a company is in a healthy financial situation before they start to lend money.

5. Government - Governments use the information provided by a company about its finances to levy tax on the profits.

6. Customers - Before another company becomes a customer or enters into a joint venture, they will look at the company's finances to make sure the company is not in trouble and that their supplies are not about to dry up.

7. Employees - Employees also have an interest in how well their employer is doing so use financial accounting information for this purpose.

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Accounting - Net Operating Losses

A Net Operating Loss is considered when the total income of a business or profession is less than its expenses or losses. A net operating loss (NOL) can apply to individuals, estates and trusts, if deductions exceed their income from all sources, personal or business-related. However, a business cannot operate at a lost forever. Normally, a business is expected to realize a profit within three to five years. These entities are expected to keep its accounting records accurate and in order, so that required information is readily available. The information will reveal the overall financial condition of the owner and the business.

Accounting for a Net Operating Loss of your business is outlined in income tax laws, which require each owner of a business to report the details of the business operation as part of the owner's personal income tax return. A net operating loss is normally carried back over the two preceding years to offset taxable income. This process requires an amended return for the years involved. If the carry-back does not use up the loss, it can be carried forward until the remainder is used up. In 2001 and 2002, Congress extended the carry back period from two years to five years. If you incurred a net operating loss during those two years and did not specify a carry-back period, you were bound by the five-year rule. The NOL was only extended for those two years and reverted back to the original law in 2003.

Accounting

The normal process of claiming a NOL is to carry it back two tax years before the NOL year and deduct it from income you had in those years. You can choose skip carry back process of an NOL and only carry it forward. However, there are rules in the details for figuring the NOL in each tax year and how much is carried to the next tax year. Contact the IRS for information on these rules. Unless you choose to waive the carry-back period, you must first carry the entire NOL to the earliest carry-back year. If the NOL is not used up, you can carry the rest to the next earliest carry-back year. Any remaining amount after two carry-back periods must be carried forward until it is used up.

Accounting - Net Operating Losses

Although a net operating loss can result in a prompt refund or a tentative adjustment for that tax year, accounting practitioners must be well versed on the new laws in order to avoid common errors. Practitioners can avoid these errors by making sure all rules are followed accurately and timely. What seem to be a small deviation from the rules, such as not using the proper claim form and processing in the time allowed or not including all supporting documents with the tax return, could cause the claim to be delayed or even denied. If the tax return has been audited, a copy of the examination must be included. Any claims not filed within the one-year period will be treated as an amended return. A separate form is required with each claim. Missing and inaccurate records can pose a problem for your accounting agent and for completing your claim.

The accounting practitioner must also look for other factors or changes that will affect your entire tax return, such as a change in filing or marital status. When such changes occur, a complete analysis of each spouse's total and taxable income, calculations, deductions, exemptions, etc must be provided. This information must be considered when figuring the NOL carry-backs and carry-overs for married people whose filing status changes for any tax year.

Incorrect calculations and figures are common errors that will delay your claim. Make sure your figures are correct and based on the figures from the original filed return. If there have been any adjustments to the original tax return amounts, use personal records or order an IRS transcript of the tax account. The IRS uses a different table for each year. The correct able must be used to calculate each carry-back year.

In accounting for an alternative tax net operating loss, the IRS requires a Form 6251 to determine the total adjustments for the ATNOL deductions. If the form is missing, a new form must be created from other tax records. If there are incorrect ATNOL calculations, figures must include all non-business and business capital gains and losses when correcting the problem. Charitable contributions are not affected by a NOL carry back. Only carry-forward losses will affect the adjusted gross income for permissible contributions.

When combining multiple years' NOL carry-backs on the same form, a breakdown of how each NOL changed must be shown separately, starting with the earliest one to determine your NOL deduction. A copy of each separate computation sheet must accompany the return. Net Operating Losses have different processing dates and statutory requirements than regular tax changes. Therefore, non-NOL adjustments must be process separately.

Farming business is a trade or business where participation is required in cultivating the land, raising or harvesting crops of an agricultural or horticultural nature, operating a nursery, raising or harvesting fruits or nuts, other crops or ornamental trees. The raising and management of animals is also considered a farming business. However, any contract harvesting of crops grown or raised by someone else, or a business that merely buy or sell plants or animals grown or raised by someone else is not considered a farming business. Certain timber losses may qualified as a farming business if any part of the property meet certain guidelines and the income and deductions fall within the required date guidelines.

You most likely to qualify for a net operating loss (NOL if your deductible loss from operating your farm is more than all of your other income for the year. A property loss due to the destruction of farming equipment or animals by a natural disaster or theft of property, whether personal or business-related, could qualify as a casualty loss, if the loss is more than your income.

Records must be kept for any tax year that generates an NOL for three years after you have used the carry-back/carry-forward or three years after the carry-forward expires.

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Mp3 Download: bit.ly iTunes Download: bit.ly CD Baby Download: bit.ly Walk off the Earth and Sarah Blackwood perform a cover of Gotye's "Somebody that I used to know" using five people on one guitar. Please help us share this by posting it on your FaceBook and Twitter. We will love you for eva and eva!! If you enjoyed this video then.... Hit the "Like" button" Add it to your Favorites and of corse Sub to our channel if you haven't already Check out WOTE on Facebook: www.facebook.com Check out Sarah on Facebook: www.facebook.com and youTube : www.youtube.com Follow us on Twitter: www.twitter.com Subscribe to Gianni and Sarah's Blog Channel: www.youtube.com Special thanks to Guilly for helping us with this video. Performers from left to right: Joel Cassidy Sarah Blackwood Gianni Luminati Marshall Taylor Extra Tages: Walk off the earth wote 2 guys 1 guitar 3 guys 1 guitar 4 guys 1 guitar 5 guys 1 guitar gianni luminati gianni nicassio sarah blackwood gianni and sarah marshall walk off the earth

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What is an Accountant?

An accountant goes over the book­keeping records of a business to find out how much the business is actually worth, and how much money it is mak­ing, and (very often) how it could make more money. His profession is called accountancy, or, more often, accounting. The first step in accounting is bookkeep­ing (and there is a separate article on bookkeeping in a later volume), but accounting only begins there. The book­keeper sets down the figures that show how much money a business has taken in and how much it has spent, but the accountant tells what the figures mean. Very few people realize how big a part the accountant has played in the growth of the United States. Until about 100 years ago, accounting was not a very important or very well developed profession. This means it is a very young profession, considering that there have been doctors for thousands of years and lawyers for almost as long. Then, as businesses grew bigger and bigger, and government laws grew more and more complex, the need for ac­counting grew.

The general public would not invest in a big business unless it had a system for proving that their money was being spent wisely. As­ All manufacturing, banking and business depends on good accounting. Accountants provided this system. A big business with dozens of branches and thousands of employees would be in a constant mess if it were not for account­ing systems to show exactly how its money was being spent and with what success, and accountants worked out the system for that too. Alfred P. Sloan, for many years head of General Motors Cor­poration, one of the biggest businesses in the world, once said that good ac­counting is the backbone of successful business. Accounting is a profession, which means that the person who practices it must have special education. An ac­countant must know much more than bookkeeping.

Accountant

He must know the prin­ciples of analyzing bookkeeping records -that is, taking every separate item and discovering exactly what it means. He must know a great deal of law as it applies to businesses, especially tax laws and laws relating to an employer's duty to his employees. Many accountants have their own offices and work for several different companies, going from one to the other to examine and analyze their books; this is called public accounting, and the accountant who practices it must know a great deal about the actual opera­tion of many different kinds of business, and must pass an examination that makes him a Certified Public Accountant. financial statements The accountant shows the result of business operations by what is called a balance sheet. A balance sheet is divided into two parts. In one part is shown everything a company owns, whether in money or in things that are worth money. These are its assets. In the other part of the balance sheet, the accountant sets down everything the company owes, or must eventually be prepared to pay.

What is an Accountant?

These are the company's liabilities. The difference between the assets and the liabilities is the company's net worth. This balance sheet, or financial state­ment, shows a company's net worth on some particular date that is the end of an The accountant prepares a "financial statement" or "balance sheet" to show how much a company is worth, but often it is hard for anyone but a businessman to understand it. Turn the page and see how the Corn Exchange Bank of New York made a simpler statement.

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Accountant, CPA or Bookkeeper?

You have started your business and things are going great, now you decide you need some help with managing your books, you open the yellow pages and under accounting you see, CPA's, Accountants and Bookkeepers. Which do you choose? Which one would be good for your small business? And what's the difference?

There are differences, and one of those differences will be cost, and as you have learned when you started your business cost will be a factor in almost every business decision you make. Which one will get you the most for your businesses dollar? That's a question you will have to decide depending on the services you think you will need.

Accountant

A CPA (Certified Public Accountant) will be the most expensive choice, and in my opinion, too much for a small business starting out. Depending on what you need a CPA's rates can run you an average of 0.00 to 0.00 a month and if your not in need of financial consulting or having tax problems, in my opinion you will be paying an unneeded expense on a service that wont be utilized for your business.

Accountant, CPA or Bookkeeper?

An Accountant can do the same things as a CPA the difference is about a 4 year degree and the required exams to be a certified public accountant, there rates wont be as high but the end results will be the same, there average rate will range from 0.00 to $ 400.00 a month with basically the same services.

A CPA and an Accountant will both do fine jobs for you, but it will cost you more than what you need to spend for something as small as managing your books, which is what you will be doing as a small business. You will take your books and all your receipts and bank statements to the account or CPA and they will hand all that to their bookkeeper who will get your books in a manageable and clean order at the rate of the accountant or CPA.

If your needs are basic and you need someone to do your books or payroll or sales tax, my advice is a bookkeeper. A bookkeeper will do just that, they will get your books in order, they can do your payroll or sales taxes and some can even do your taxes, all this a t a much lower cost, the average rate for a bookkeeper is 0.00 to 0.00 a month depending on your needs.

If you do have an accountant or a CPA, and you have a bookkeeper do your books, you will still save money because your books will be in good clean shape when you give them to your accountant or CPA, meaning they don't have to have their bookkeeper do anything and the time they bill you for will be quite less than if they had to clean up your books every month.

Cutting cost in your business is going to be something you will always look for and this little tip could be a savings you don't want to ignore, my advice do some research, call some CPA's Accountants and some Bookkeepers, compare their services and rates, then choose the best for your business.

Accountant, CPA or Bookkeeper? Daddy Yankee - Lovumba (Behind The Scenes) Video Clips. Duration : 3.00 Mins.
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Music video by Daddy Yankee performing Daddy Yankee- Lovumba (Behind The Scenes) .

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Principles of Accounting and Accounting Assumptions

In the modem world no business can afford to remain secretive because various parties such as creditors, employees, taxation authorities, investors, public and government etc., are interested to know about the affairs of the business. Affairs of the business can be studied mainly by consulting final accounts and the balance sheet of the particular business. Final accounts and the balance sheet are end products of book-keeping. Because of the importance of these statements it became necessary for the accountants to develop some principles, concepts and conventions which may be regarded as fundamentals of accounting. Such fundamentals having wide acceptance give reliability and creditability to the financial statements prepared by the accountants. The need for 'generally accepted accounting principles' arises for two reasons: First, to be logical and consistent in recording the transactions and second, to conform to, the established practices and procedures.

There is no agreement among the accountants as regards the basic concepts of accounting. There is no uniformity in generally accepted accounting principles (GAPP). The terms-axioms, assumptions, conventions, concepts, generalizations, methods, rules, doctrines, techniques, postulates, standards and canons are used freely and inconsistently in the same sense.

Accounting

Principles

Principles of Accounting and Accounting Assumptions

"A general law or rule, adopted or professed as a guide to action, a settled ground or basis of conduct or practice." This definition given by dictionaries comes nearest to describing what most accountants mean by the word 'Principle'. Care should be taken to make it clear that as applied to accounting practice, the world principle, does not connote a rule for which there can be no deviation. An accounting principle is not a principle in the sense that it admits of no conflict with other principles.

Postulates

Mean to assume without proof, to take for granted or positive consent, a position assumed as self- evident. Postulates are assumptions but they are not arbitrary deliberate assumptions but generally recognized assumptions which reflect the judgment of 'facts' or trend or events, assumptions which have been borne out in past by facts supposed by legal institutions making them enforceable to some extent.

Doctrines

Mean principles of belief: what the scriptures teach on any subject. It refer to an established principle propagated by a teacher which is followed in strict faith. But in accounting practice, no such doctrine need be adhered to but the word denotes the general principles or policies to be followed.

Axiom

Denotes a statement of truth which cannot be questioned by anyone.

Standards

Refer to the basis expected in accounting practice, under different circumstances. In Indian context, the Institute of Chartered Accountants of India (ICAI) constituted an Accounting Standards Board on 21st April, 1977. The main function of ASB is to formulate accounting standards taking into consideration the applicable laws, customs, usages and business environment.

Accounting Assumptions

The International Accounting Standards Committee (lASC) as well as the Institute of Chartered Accountants of India (ICAI) treat (vide IAS-I & AS-I) the following as the fundamental accounting assumptions:

(1) Going concern

In the ordinary course, accounting assumes that the business will continue to exist and carry on its operations for an indefinite period in the future. The entity is assumed to remain in operation sufficiently long to carry out its objects and plans. The values attached to the assets will be on the basis of its current worth. The assumption is that the fixed assets are not intended for re-sale. Therefore, it may be contended that a balance sheet which is prepared on the basis of record of facts on historical costs cannot show the true or real worth of the concern at a particular date. The underlying principle there is that the earning power and not the cost is the basis for valuing a continuing business. The business is to continue indefinitely and the financial and accounting policies are followed to maintain the continuity of the business unit.

(2) Consistency

There should be uniformity in accounting processes and policies from one period to another. Material changes, if any, should be disclosed even though there is improvement in technique. A change of method from one period to another will affect the result of the trading materially. Only when the accounting procedures are adhered to consistently from year to year the results disclosed in the financial statements will be uniform and comparable.

(3) Accrual

Accounting attempts to recognize non-cash events and circumstances as they occur. Accrual is concerned with expected future cash receipts and payments: it is the accounting process of recognizing assets, liabilities or income for amounts expected to be received or paid in future. Common examples of accruals include purchases and sales of goods or services on credit, interest, rent (not yet paid), wages and salaries, taxes. Thus, we make record of all expenses and incomes relating to the accounting period whether actual cash has been disbursed or received or not. If a fundamental accounting assumption (i.e. Going concern, consistency and accrual) is not followed (in the preparation of financial statements) the fact should be disclosed. [AS-I para 27].

Principles of Accounting and Accounting Assumptions The Dark Knight Rises Official Movie Trailer Christian Bale, Batman Movie (2012) HD Tube. Duration : 2.18 Mins.
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The Dark Knight Rises Official Movie Trailer Christian Bale, Christopher Nolan, Batman Movie (2012) HD Subscribe to TRAILERS: bit.ly Warner Bros. Pictures' and Legendary Pictures' "The Dark Knight Rises" is the epic conclusion to filmmaker Christopher Nolan's Batman trilogy, Leading an all-star international cast, Oscar(R) winner Christian Bale ("The Fighter") again plays the dual role of Bruce Wayne/Batman. The film also stars Anne Hathaway, as Selina Kyle; Tom Hardy, as Bane; Oscar(R) winner Marion Cotillard ("La Vie en Rose"), as Miranda Tate; and Joseph Gordon-Levitt, as John Blake. Returning to the main cast, Oscar(R) winner Michael Caine ("The Cider House Rules") plays Alfred; Gary Oldman is Commissioner Gordon; and Oscar(R) winner Morgan Freeman ("Million Dollar Baby") reprises the role of Lucius Fox. The screenplay is written by Christopher Nolan and Jonathan Nolan, story by Christopher Nolan & David S. Goyer. The film is produced by Emma Thomas, Christopher Nolan and Charles Roven, who previously teamed on "Batman Begins" and the record-breaking blockbuster "The Dark Knight." The executive producers are Benjamin Melniker, Michael E. Uslan, Kevin De La Noy and Thomas Tull, with Jordan Goldberg serving as co-producer. The film is based upon characters appearing in comic books published by DC Comics. Batman was created by Bob Kane. "The Dark Knight Rises Official Movie Trailer" trailer Dark knight rises "dark knight rises" "Christian Bale" "Anne Hathaway" "Tom Hardy ...

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