Posts - Page 139 of 230 - Accounting Instruction, Help, & How To (Financial & Managerial)

Statement of Cash Flow Indirect Method Cash & Net Income

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 16th, 2018. Leave a comment

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.
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Job Cost System Cost Flow

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 15th, 2018. Leave a comment

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.
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Effective Interest Bond Discount Amortization in Excel

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 14th, 2018. Leave a comment

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.
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Direct Method Worksheet Statement of Cash Flows

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 13th, 2018. Leave a comment

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.
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Bond Retirement – Journal Entry to Retire a Bond

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 11th, 2018. Leave a comment

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.
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Statement of Cash Flows – Tools Needed For Completion

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 8th, 2018. Leave a comment

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

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 7th, 2018. Leave a comment

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.
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Managerial Accounting Introduction

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 6th, 2018. Leave a comment

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.
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Bonds Present Value Formulas

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 5th, 2018. Leave a comment

Present value formulas for bonds will take a look at the present value formulas for both a single payment and for an annuity. One of the reasons bonds works well to practice present value formulas is because they have both a single payment at the end of the term and an annuity payment and these are the major two formats we can use to calculate present value. Present value can be calculated multiple different ways. Present value can be calculated using equations, using present value tables, using financial calculators, or using Excel. We will focus on the present value formulas here.
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Statement of Cash Flows-Indirect Method-Change In Accounts Payable

Written by Bob Steele CPA - Accounting Instruction, Help & How To on September 4th, 2018. Leave a comment

Statement of cash flows using the indirect method and concentrating on the change in accounts payable. The indirect method will differ from the direct method by starting with net income and entering adjustments to arrive at cash flows from operations. The indirect method reconciles net income to cash flows from operations by analyzing the changes in balance sheets accounts, in current assets and current liabilities. When considering these changes we can learn a rule that helps us construct the statement of cash flows and it is also useful to understand the reasoning behind the rule.
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