Simple Personal Finance Checklist – Consider yourself as a Business

Why would you not consider yourself a business of ONE person? Or your family as a business of 3 or more people? Well that is exactly what you are – “Me Incorporated”, “I Inc”, “We Incorporated”. You truly must consider yourself a small family business. Like any business you have ongoing expenses (mortgage, rent, utilities, groceries), revenue (salary and other income) and major capital expenditures (house, vehicle, vacations, renovations).

Like any good ‘household business’, you need to do some planning. Set out a budget for the year, track your expenditures and retained earnings (savings). Yes, all of this looks, feels and is exactly like a well run business. On My Gosh! Don’t rush out and buy an accounting package to run your household. And no need to take a crash course on accounting or bookkeeping. You can accomplish all your financial tracking and planning requirements with some paper or by using a simple template with your favorite spreadsheet package – Microsoft Excel or even with Open Office.

Just like a well run business, your household budget and tracking your spending is best served using a visible record of events; namely, financial records, bank or check register. It is just like tracking your road trip progress using a map. If you know where you are now, then you will have some idea when you will arrive at your destination. In life, money or finances allows you to get to your personal destinations or dreams. A visible financial roadmap of your ‘Me Incorporated’ finances, mapping your progress, seems logical.

Running your ‘Household Business’, like corporate business, requires a few processes to keep track of your finances:

1) Establish a yearly and monthly household budget. Consider all your expenses – weekly, monthly, quarterly and yearly outlays of money. You will be surprised at the length of this list and all the places you spend your money.

2) Track monthly your actually spending and income against the budget you established in step 1. This will help you see the ‘peaks and valleys’ of spending or seasonality aspect of your expenses. Over time, you will come to know these expense ‘peaks and valleys’ and this will help you maintain a positive cash flow. Bottom line: have money in the bank to pay all your expenses and still have some left over (retained earnings). Your single biggest challenge in running any household (or business) is always having enough money in the bank to pay the bills; especially, the unexpected ones. Having a buffer of savings will help with these ‘peaks’ in expenses.

3) Track all your bank account activity. Track and enter in your Bank or Check Register every deposit, every electronic (ATM, web, PayPal, debit machine) transaction and every analog (check, money order) withdrawal. And reconcile your bank statement every month. Know exactly how much money you have available in your bank account(s).

4) Especially track your spending through credit cards and lines of credit. These are potentially the ‘run away’ expenses. Remember only once a month do you see the visible record of your credit card spending. Compound that with the fact that most people have more than one credit card. This can easily result in multiple ‘spending surprises’ each month. Be diligent in tracking your use of credit card transactions. Breakdown the credit card expenses into their respective budget items – gas, groceries, clothing, entertainment, etc. This will help you separate normal household expenditures from other shopping incidentals. You will come to see your spending patterns and can now make adjustments. Just like your bank account, reconcile your credit card statement every month.

All this personal bookkeeping every month can be done with pen and paper or set up a personal finance and budgeting template using your favorite spreadsheet software. Using an electronic spreadsheet allows for all of the mundane calculations to be processed automatically, reducing monthly reconciliations to a simple 5-10 minute endeavour. Whether you choose an analog or digital approach to your personal finance bookkeeping, these visible records are the most effective way to plan and control your personal finances and reduce one of the major stress points in your life – Your Financial Health.

Just in case you don’t know who Jordan Goodman is…. Jordan E. Goodman is “America’s Money Answers Man” and a nationally-recognized expert on personal finance. He is a regular contributor to Public Radio International’s The Marketplace Morning Report and is a daily guest on radio and television call-in shows across the country, answering questions on personal financial topics. He appears frequently on NBC’s The Today Show, PBS, MSNBC, CNN, CNBC, and Nightline. For 18 years, Mr. Goodman was on the editorial staff of Money magazine, where he served as Wall Street correspondent. While at Money, Mr.Goodman reported and wrote on virtually every aspect of personal finance. In addition, he served as weekly financial analyst on NBC News at Sunrise for 9 years and the daily business news commentator on Mutual Broadcasting Systems America in the Morning show for 8 years. He is the author / co-author of three best-selling books on personal finance including Everyone’s Money Book (over 200000 copies sold) and Barron’s Dictionary of Finance and Investment Terms and The Money Answers Dictionary. His upcoming books are 6 special focus editions of Everyone’s Money Book on College, Credit, Financial Planning, Real Estate, Retirement Planning and Stocks, Bonds and Mutual Funds. Jordan is also a speaker and seminar leader on personal finance topics for business executives, students, associations, investment clubs, employees and others.
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Contra Accounts – 8 Workhorses Of Bookkeeping And Accounting

While the general public and business people are familiar with the general accounts that appear in the financial statements, many owners, executives, and other non-accounting personnel often ignore the lesser known accounts that are called Contra Accounts.

Contra Accounts are accounts that are matched or paired to a related account and subtracted from it. These bookkeeping accounts are included in the company’s chart of accounts. Often they might just be called ledger accounts or GL accounts.

If we see in a balance sheet:

Equipment ………………………………….0,000

Less: Accumulated depreciation……….. 20,000….. 100,000

Accumulated depreciation is the ‘contra account,’ and ‘Equipment,’ the related account.

Balance sheet contra accounts:

Accumulated depreciation……………………… contra-asset

Accumulated depletion………………………….. contra-asset

Drawing…………………………………………….. contra-capital

Allowance for doubtful accounts………………. contra-asset

Discount on bonds payable…………………….contra-liability

Income statement contra accounts:

Sales returns and allowances…………………. contra-revenue

Sales discounts…………………………………… contra-revenue

Purchase returns and allowances…………….. contra-cost

Purchase discounts………………………………. contra-cost

All accounts have what is known as a ‘Normal Balance.’ The normal balance of an account corresponds to the side in which the account is increased. To fully understand this concept, let’s have a refresher of the rules of accounting:

Rule of Accounting 1, for assets:

Increases in assets are recorded by debits to the asset accounts. Decreases in assets are recorded by credits to the assets accounts.

Rule of Accounting 2, for liabilities:

Increases in liabilities are recorded by credits to the liability accounts. Decreases in liabilities are recorded by debits to the liability accounts.

Rule of Accounting 3, for owner’s equity:

Increases in owner’s equity are recorded by credits to the owner’s equity accounts. Decreases in owner’s equity are recorded by debits to the owner’s equity accounts.

According to the above rules, assets are increased by debits; liabilities and owner’s equity by credits. It follows then that the normal balance of all assets is debit, and for liabilities and owner’s equity accounts the normal balance is credit.

To illustrate: Cash is an asset account; therefore, its normal balance is debit. Now, if for some reason the cash account shows a credit balance, then credit would be ‘abnormal.’ The explanation could be that we have overdrawn the account. Or perhaps it is a mistake such as a misposting.

Now, in the case of the contra accounts, they will have a normal balance that is the opposite of their related account. If we focus on the above example where we show Equipment 0,000. We can now say that the normal balance of Accumulated depreciation is credit (the opposite of the related account Equipment).

We are now prepared to give a full definition:

A contra account is an account that is matched or paired to a related account and subtracted from it. Therefore, its normal balance is the opposite of the related account.

Accounting jobs in Gulf Middle-East Countries -Dubai -UAE ,Doha-QATAR . Muscat-OMAN , Riyadh-SAUDI ARABIA ,KUWAIT

Accounting jobs are becoming more popular nowadays because of the emergence of so many businesses and new companies in gulf and middle east countries. Among these accounting jobs are administration jobs. Accounting jobs are expected to grow faster than the average for all occupations.

Accounting jobs are plentiful. Investment management type jobs (which like to see their front office employees pursuing the CFA) are super competitive, akin to investment banking. Accounting jobs are stable and easy to come by if you have the right tools.

Accounting jobs are available with public accounting firms, government, corporations and with self-employed certified public accountants.Accounting jobs are as prominent in most cities as they are in any other area of the country, with many graduates working for the big firms. Accounting jobs are mainly certified public accountants (CPA) and registered public accountants (RPA), and may also include auditing, bookkeeping, credit analysts, and reports preparation.

Accounting jobs are highly skilled, highly lucrative and highly sought after. In places like Dubai, Abu Dhabi, jobs in the accounting field are opening faster than they can find people to fill them. Accounting jobs are increasing because of tougher financial laws and regulations in the  wake of the after effects of current downturn . Employment for financial analysts and personal financial advisers is expected to increase faster than average as well, as business and individuals invest more.

In a field like auditing, where skills are more transportable, there is still some resistance to hiring from outside the country. The concern can center on the candidate’s communication skills; many accounting jobs have to deal with clients in a face to face environment and the accountant’s comfort in English is paramount.

Accountants are considered strategic business partners of their organizations and work in a variety of different areas. They are generally smart people who can help you solve sticky problems. Accountants are concerned about how collect data should be used whereas number crunchers are busy thinking how data should be collected. If simple number crunching was what was required, then artificial intelligence of computers would be sufficient, but employers want to look for accountants who are emotionally intelligent and are team players.

Like the rest of the world’s major centers there is a trend of being employed for the accountant job in Dubai ,Doha, Riyadh ,Muscat and Kuwait is being perceived as an honor.

Accounting is the practice of collecting and measuring data in order to allocate resources. People are needed to monitor, evaluate, and produce financial and resource data for accounting. There is a pool of specialties to choose from when considering where to develop accounting expertise.

Accounting can be broadly classified as either general accounting or auditing. Accounting is specific to managing a business’s finances by keeping track of payroll and company expenses. Auditing is a practice where records are reviewed and a conclusion is reached to provide a recommendation for action. An auditor reviews records managed by accountants to determine their correctness.

Accounting careers have the following specialties:

Bookkeeping

The term ”bookkeeping” is generally used to refer to recording financial transactions. The job of a bookkeeper (also called an accounting clerk), is managing records with regard to purchases, sales, receipts, and payments.

Accounts Receivable

”Accounts receivable” refers to billing customers using a sales ledger and creating a receivables entry, which is also reflected on the balance sheet.

Accounts Payable

Accounts payable is a form of debt that the company owes its suppliers. Accountants working in accounts payable receive bills from suppliers and create accounts payable entries.

Tax Accounting

Accountants who are experts in tax matters manage tax accounting. Their job primarily involves preparing tax returns for their company.

Cost Accounting

The job of a cost accountant is to track, record, and analyze costs. This form of accounting is used to manage company costs and improve profitability.

Payroll and Timekeeping

Payroll and timekeeping clerks keep track of workers’ time sheets and payroll. They ensure that employees are paid on time and that their paychecks are accurate.

Conclusion

No matter which field of accounting you choose, for a successful accounting career it is important to be comfortable using spreadsheets and other financial and accounting software such as QuickBooks and Microsoft Excel.

Financial Accounting ACG2021 SFCC Spring 2008 Crosson Chapter 2

The strange and confusing world of Canadian accountants

The strange and confusing world of Canadian accountants

The word “accountant” is not protected by legislation in Canada. Anyone can claim to one. I’ve seen people call themselves a practical accountant, small business accountant, tax accountant, registered public accountant and many other similar names.

To complicate matters there are three accounting bodies recognized by legislation – Chartered Accountants (“CA”), Certified General Accountants (“CGA”) and Certified Management Accountants (“CMA”). They have varying amounts of experience, skill and training. Another organization – The Association of Chartered Certified Accountants (“ACCA”), which is not recognized by legislation, and claims to be the global body for professional accountants, offers their services. There are also thousands of Certified Public Accountants (“CPA”) from the United States and elsewhere.

For a country of about 34 million the accounting landscape is very complex. Contrast this with the United States, with a population of over 300 million, where a single designation is the most prominent – Certified Public Accountant.

Given all the choices how do you pick a Canadian accountant? I’m a Chartered Accountant (and a licensed public accountant in Ontario), and perhaps a little biased, but I believe Chartered Accountants are the best option. Regardless, start first by deciding why you need an accountant. Often the need is to prepare a tax return, help with special tax situations and planning, bookkeeping or just general advice. Then develop an image of the ideal accountant and try to find a match. Get a referral from your banker, a business colleague or friend that uses an accountant or knows one. A referral from a trusted source is one of the best ways to find a good one.

If you are a business owner, and give your financial statements to anyone other than the tax department, you need a licensed public accountant. Almost all public accountants in Ontario are Chartered Accountants but in the rest of the country a public accountant could be a CGA or CMA. If you don’t distribute financial statements, or are not a business owner, you can usually pick an accountant of your choice – licensed or not. 

If you come up short check the member directories of the accounting associations. Every professional body maintains a complete list of members and the directory is searchable.

Another way is to search Google. Search for the word “accountant” and the city where you live. We’re located in Mississauga, Ontario, Canada so you’d search “Mississauga Accountant” or “Accountant Mississauga” and the names of local accountants are listed. Google is a good way to find names but not necessarily the best accountant.  

Auditorium – Accounting on an iPhone? Who knew


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Softline Pastel – a member of the Softline Group and a local leader in accounting, payroll and business software — has launched Pastel My Business Online, its first online accounting system, which targets small to medium businesses (SMBs).

“Very often, products become complicated by the sheer volume of features added to it over time," says Softline Pastel managing director Steven Cohen, who explained that by developing Pastel My Business Online from scratch, the company had the opportunity to design the software specifically for business owners who were either starting out with very little bookkeeping knowledge, or who only wanted a basic system.

See tinyurl.com/pastel-online

Wahid’s Belief – learn which accounting method is superior for your big business

Author comments: I have expressed about an ‘Accrual basis accounting and cash basis accounting’ method and the difference between these methods through a short, essay & plain approach in one of my articles “Wahid’s guess” I believe the learners would have understand about both of accounting method,

 

Now, in this article I have presented that which accounting method is better for an organization accounting structure, Again I have explained the meaning of two methods and others important elements for comprehend an students and readers so as to  below

 

Introduction: In cooperation Accrual and Cash are methods are approved by generally accepted accounting principles (GAAP) for small business. Only the Accrual method is acceptable for large businesses. For the reason that of Social Security Administration’s (SSA) dealing of income from self-employment, one method may be beneficial over the other, during this article I have mentioned which accounting method is better for an organization accounting structure

 

 

Meaning Accrual basis Accounting:

It is a method of accounting in which transaction are entered in the books of accounts, In accrual basis accounting, income is reported in the financial period it is earned, anyway when it is received, and expenses are deducted in the financial period they are incurred, In the Accrual method of accounting transactions are recorded when they happen rather than when the money is received or paid. This makes the accounting slightly more difficult because business  are dealing with goods that have been purchased but not paid for and sales that have been made but the cash has not been collected. Business record both revenues and expenses when they occur. For that reason, the focus is on the recording of flow of resources like labour, goods, services and capital. The related cash flow may take place after some time or it may or may not take place in the same accounting period.

 

Meaning Cash basis Accounting:

In the Cash method of accounting the business is run like a checkbook. When goods and services are purchased and paid for, they are recorded. When products are sold and the cash collected No consideration is given to the “due” fact of the transaction. This system of accounting is simple to understand and as such needs less skill on the part of the accountant. Its whole focus is on cash management. The recognition trigger is simply the flow of cash. Budgetary and legislative compliance is easier under this system. An example of the cash basis would be a sale of goods in January, but the money is not received from the customer until February. Under the Cash Basis of accounting, this would be considered income in February. If attendance at a trade show was planned for May but had to be paid for in March, in a cash basis accounting it would be expensed when it was paid for in March. This method of accounting.

 

 

Recompense or Advantages of the Accrual method Accounting

 

The method of Accrual Accounting as retaining the advantages of the Cash Accounting System overcomes its limitations or restrictions by addition of Cash Flow Statement in the Financial Statement of the entity. The major rewards are as below

 

I. As the accrual method shows the recede and flow of business income and debts more exactly, it may depart you in the gloomy as to what cash funds are obtainable,

 

II. Accrual accounting helps in the measurement of financial presentation by properly reflecting surplus/deficit as all expenses whether paid or not and all incomes whether received or not are duly accounted for.

 

III. Accrual accounting afford comprehensive information on expenses which helps in knowing the cost consequences of policies and enables comparison with different policies. Also, information about calculation of financial assistance can be extracted from the accounts, which helps in its validation. This ensures the adoption of best policy, which in turn assures best use of sparse resources. It also helps in determining the future sustainability of programmes

 

IV. Accrual method provides disclosures on account of dependent assets and dependent liabilities so that risk connected with the guarantees issued and letters of console given can be better assessed by the user of the financial statements

 

V. Accrual method discloses the Accounting Policies used in the groundwork of Financial Statements for better accepting and approval of the Financial Statements.

 

Restrictions Limitations of Accrual method accounting: this could result in serious cash flow problem. For case in point, your income ledger may show thousands of dollars in sales, although in reality your bank account is empty for the reason that your customers haven’t paid you yet.

 

The Restrictions or limitations of cash method accounting:

 

The method of cash accounting gives a wrong picture of income received, as advance tax receipts are recognized as income the major Restrictions or limitations are as below

I. It does not provide the complete picture of the financial position i.e. information on assets and liabilities are not available for fixed assets (land, building, machineries, heritage assets etc.)

II. It does not give the full information on current assets e.g. accrued income like outstanding royalty, fees, service charges, tax arrears etc. other than No information about capital work-in-progress like dams, power plants, roads and bridges etc. is available

III. It ignores certain transactions by not recording expenditure already incurred but payment not made e.g. supplies made, salary, telephone charges, overdue interest etc. and also revenue earned but cash not received e.g. license fees, services delivered (electricity, water etc.)

IV. It gives a wrong picture of income received, as advance tax receipts are recognized as income.

V. It provides room for fiscal opportunism e.g. tax revenues can be collected in excess during a particular period followed by high incidence of refunds together with interest, payments can be easily deferred and passed on to the next financial year, revenue due in the future could be compromised by providing for one time payments.

 

Due to the above disadvantages, it is not potential to get the real picture of the management financial performance and position.

 

Recompense or Advantages of the cash method accounting: the cash method provides a more exact picture of how much actual cash your business has; it may offer a confusing picture of longer-term profitability. Under the cash method, for case, firm books may show one month to be hugely profitable, when really sales have been slow and, by coincidence, a lot of credit customers paid their bills in that month. To have a firm and true thoughtful of business’s finances,

 

Mode of choosing an Accounting Method: When, how, & why we can choose whichever accounting method from both. (Accrual & cash method accounting) Most small businesses (with sales of less than million per year) are free to accept either accounting method. When we must use the accrual accounting method. We must use the accrual method if: our business has sales of more than million per year, or our business stocks an inventory of items that we will sell to the public and our  gross receipts are over million per year. Inventory includes any commodities our sell, as well as supplies that will physically become part of an item intended for sale. Either method we use, it’s important to realize that either one gives we only a partial picture of the financial status of our business

 

Techniques to choose which accounting method is better for organizations accounting structure

 

The cash method and the accrual method (sometimes called cash basis and accrual basis) are the two principal methods of keeping track of a business’s income and expenses. In most cases, we can choose which method to use. In this article I have explain. How they work and the advantages and disadvantages of each. so we can choose the better one from both accounting method for our business.

 

These methods are different only in the timing of when communication, including sales and purchases, are credited or debited to your accounts. Here’s how each works: the cash method. The cash method is the more normally used method of accounting in small business. Under the cash method, income is not counted until cash (or a check) is actually received, and expenses are not counted until they are actually paid.

 

Case in point: One of the businesses finishes a job in November, and doesn’t get paid until three months later in January. Beneath the cash method, we would record the payment in January. Beneath the accrual method, we would record the income in our November books.

 

The accrual method transactions are counted when the order is made, the item is delivered, or the services occur, regardless of when the money for them (receivables) is actually received or paid. In additional income is counted when the sale occurs, and expenses are counted when we receive the goods or services. We don’t have to wait until you see the money, or actually pay money out of our checking account, to record a transaction.

 

Another case in point: We purchase a new computer on credit in October and pay ,000 for it in December, two months later. Using the cash method, we would record a ,000 payment for the month of December, the month when the money is actually paid. Under the accrual method, we would record the ,000 payment in October, when we take the computer and become obligated to pay for it.

 

Why Accrual Accounting vital?

 

The extent of economic events that occur over a period of time has become more and more complex in the 21st century. There is now a common shove near accrual accounting as a technique of growing the international comparability of national economic accounting standards.

 

For this reasons of equally government and corporate decision-making strategy as well as fundamental analysis, it is important to calculate economic trial in the time period when they essentially occur as opposed to the period when monetary dealings are made. In some cases, payments under government social programs, such as Medicaid grants, are dependent on formulas attached to personal income; inaccurate revenue inference may lead to beneath- or overpayment of curriculum settlement. Further commonly, accrual dimension of economic series is significant for the accurate estimate of economic trends over time.

 

Conclusion: The best represents the authentic condition (in other words the “true and fair” view) should be used. If proceeds from tax is not calculable and is vague or complicated to understand, then the accurate standard would be to identify such income on cash basis. The accrual-based system that basically follows the ethics of conservatism and measurability requires that we “expected no gains, but afford for losses”. In the background of government accounting, recognizing expenditure on accrual basis meets the criteria of conservatism, measurability and achievability

 

The fundamentals of accounting explained in a couple of minutes
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