Posts in the Financial Accounting category:
QuickBooks Desktop Vs QuickBooks Online – 2019
QuickBooks Desktop vs. QuickBooks online will discuss some of the pros and cons between the two major QuickBooks categories. When choosing accounting software there are many options. If we have narrowed down the field to QuickBooks we need to keep narrowing. QuickBooks has two major categories, QuickBooks Online and QuickBooks Desktop. Within each category we have more options to consider.
Many of the differences between the two QuickBooks software packages stem from one being cloud based and one being installed on the computer. QuickBooks Desktop has a one time fee while QuickBooks online is paid with a subscription. QuickBooks Pro can handle multiple user with one QuickBooks program while we wee to set up new accounts for each new company when using QuickBooks Online. QuickBooks Desktop allows for static backups to be made while QhiclBooks online is stored on the Intuit servers. The look and feel of the two QuickBooks packages are much different.
For more accounting and QuickBooks information see accounting website.
Statement of Cash Flow Indirect Method Cash & Net Income
We will start to put together a statement of cash flows using the indirect method. We have constructed a worksheet from a comparative balance sheet showing balance sheet accounts for the current period, the prior period and the difference or change between the two. Our next step is to allocate these changes in balance sheet account from the worksheet to the statement of cash flows, finding the correct section of either operating activities, investing activities, or financing activities. The starting point is often the most confusing. The end result of our cash flow statement is basically the change in cash. We start the cash flows from operations section with net income but we would like to think about net income as a change in balance sheet accounts. Net income will be part of the change in retained earnings.
For more accounting information see accounting website.
Job Cost System Cost Flow
Job cost system cost flows will provide an overview of cost flows in a job cost system. The job cost system is one of two cost tracking systems typically used when producing inventory, the other being a process cost system. Both systems will need to track the costs from raw material to converting those raw materials to finished goods. The job cost system will support this process by allocating costs to jobs and tracking the costs of each job using a job cost system. When producing inventory we will start by purchasing materials. We will then transfer the materials to either work in process or to orverhead depending on whether we can apply the cost to a job. We will then apply direct labor to the work in process account and use an estimate to apply overhead. Once the inventory is completed we will move it from the work in process account to finished goods, the finished goods account also being supported by job sheets. Finally, we will sell the finished goods inventory and move the cost from finished goods to cost of goods sold.
For more accounting information see accounting website.
Effective Interest Bond Discount Amortization in Excel
Effective interest bond discount amortization in Excel will calculate the amortization of a bond discount using the effective method. A bond discount results when bonds are issued for less then the face amount on the bond resulting in a journal entry that will debit cash, credit bonds payable, and credit discount. We will then need to decrease the discount during the life of the bond. We will reduce the discount to interest expense during the bond life. We can use either a straight line method or the effective method to amortize the discount. The straight line method is not the preferred accrual accounting method because it does not apply the matching principle as well as the effective method. The effective method is more complex, however.
For more accounting information see accounting website.
Direct Method Worksheet Statement of Cash Flows
Direct method worksheet – statement of cash flows will put together a working in Excel that we will use to build the statement of cash flows using the direct method. Putting together a well formatted worksheet is the most important step to being able to complete a statement of cash flows. To put a statement of cash flows worksheet together we will need a comparative balance sheet, or balance sheet numbers for the current period and the prior period. The statement of cash flows worksheet we use for the direct method will be similar to the statement of cash flows worksheet we use for the indirect method but not the same. We will include the income statement accounts for the current period when performing the statement of cash flows using the direct method.
For more accounting information see accounting website.
Bond Retirement – Journal Entry to Retire a Bond
A bond can be retired before the maturity date or at the maturity date. The retirement of a bond means we will be closing the bond by paying out what is owed. When closing a bond at the end of the bond term, after all interest payments on the bond have been paid, is a simple journal entry. We will be left with the face amount of the bond on the trial balance after all interest payments have been made and after the amortization of the bond discount or bond premium in complete. We will debit bond payable making it go down to zero and credit cash.
A bond that is closed out before maturity results in a transaction that is more complex. Bonds that close out before maturity are callable bonds, providing the issuer the option to call the bond as some price in the future.
The journal entry to close out a bond before maturity will include a debit to bonds payable a credit to discount or a debit to premium for the amount not yet fully amortized, a credit to cash and a debit to loss or credit to gain on the transaction.
For more accounting information see accounting website.
Statement of Cash Flows – Tools Needed For Completion
Statement of cash flows – Tools needed for completion will talk about the tools we will need to complete a statement of cash flows. The statement of cash flows will generally be the last financial statement we will prepare. In other words, we will prepare the balance sheet, income statement, and statement of equity before the statement of cash flows. The primary tool financial statement we will use will be the balance sheet. We will need a comparative balance sheet or a balance sheet showing the current period and the prior period. From this balance comparative balance sheet will generally create a worksheet showing us the changes from year to year. We will also need the income statement. When using the indirect method the income statement will be necessary to verify some balances. We will also need additional information which is often given in a book problem. In practice we would need the general ledger for some accounts and access to supporting documents for some transactions.
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Cost Classifications – Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs
Cost classification will go over some of the classification methods used in managerial accounting. It is often useful to classify cost by behavior because this helps us generate projections. The two major classifications of costs by behavior are fixed costs and variable costs. Fixed costs do not increase as production increases. Rent is a good example of a fixed costs. As production increases the amount of rent stays the same. Variable costs increase with production. Direct materials is an example of a variable cost.
For more accounting information see accounting website.
Managerial Accounting Introduction
Managerial accounting introduction will introduce the topic of managerial accounting. It is useful to compare managerial accounting to financial accounting. Most differences between the two accounting categories are derived from the objectives of the users. In other words, managerial accounting is designed to help internal users while financial accounting is designed to help external users. Financial accounting has more laws and regulations because external users are depending on them. Managerial accounting reports can be generated any time where as financial accounting reports are generated based on a strict schedule. Managerial accounting if future focused while financial accounting is based on reporting past numbers. Managerial accounting often focuses on segments of an organization while financial accounting looks at the big picture. Managerial accounting will use a lot of numerical data but will also use other forms of data while financial accounting generally focuses on dollars as the form of reporting.
For more accounting information see accounting website.