Month: January 2018

Bookkeeping – Employee Health Insurance Mandate (Lesson 89)

After three decades of discussion, in-fighting and wrangling, Congress passed a health insurance mandate along party lines of vote.  This health insurance mandate changed the rules for employers and affects the accounting department and in particular, the proper bookkeeping for the respective amounts paid by both the employer and employee.  To acquire the advanced bookkeeping …

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Bookkeeping – Employee Benefits (Lesson 88)

There are a multitude of employee benefits employers provide to their employees.  This series covers several groups of benefits and explains the legal and accounting issues related to them.  This particular lesson introduces the concepts behind employee benefits and the basic accounting process.   In addition, I’ll explain the tax consequences and the corresponding payroll process …

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Bookkeeping – Estimating Extraordinary Items (Lesson 87)

The final type of estimating relates to unusual and infrequent items.  These are commonly referred to as extraordinary items.  Basically, they rarely occur but do happen once or twice over an economic cycle.  The following are examples: * Accidents * Losses Associated with Natural Disasters * Fires * Work Stoppage (Labor Strike, Civil Unrest, Community …

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Bookkeeping – Estimating Warranties (Lesson 86)

Another estimate requirement for accountants deals with warranties.   Warranties are assurances to customers that the product sold or service rendered will perform as stated or contracted.  Often products or services are defective and therefore require replacement or repair.  To properly match the cost of warranty work against the revenue generated an estimate of costs is …

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Bookkeeping – Estimating Employee Benefits (Lesson 84)

Another required estimate needed in accounting relates to employee benefits.  Employee benefits consist of vacation, sick time, retirement benefits, healthcare and other de minimis benefits.  As a function of accrual accounting these benefits are estimated and posted as a deferred liability in the accrued payroll section of the current liabilities section of the balance sheet.  …

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Bookkeeping – Estimates (Lesson 82)

There are many transactions in accounting requiring the accountant to use estimates for the respective debits and credits.  The following five lessons cover how estimating is performed with depreciation, payroll benefits, bad debts, warranties and extraordinary items.  This lesson explains why estimating is needed and used in business.   In addition, there are two widely accepted methods of …

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Bookkeeping – Restricted Accounts (Lesson 81)

The third group of temporary accounts comprise restricted accounts.  These accounts are classified with the term ‘restricted’ due to a legally mandated or contractual obligation to limit access to their funds.  Most often, restricted accounts consist of cash or some physical asset.  It is rare to find a restricted account in the form of an …

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