Month: January 2018

Bookkeeping – Employee Health Insurance Mandate (Lesson 89)

Employee Health Insurance Mandate

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. 

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Bookkeeping – Employee Benefits (Lesson 88)

Employee Benefits

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.

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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 Bad Debts (Lesson 85)

The most annoying part of owning a small business is when the customer fails to pay for items purchased or services rendered.  Not only is this a personal insult it also greatly affects cash flow in a business.  The reality is that some customers can’t pay their bills.  Tolerating non-payment is simply a part of...

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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 – Estimating Depreciation (Lesson 83)

Depreciation is a form of an allowance for the wear and tear (exhaustion) of property used in a trade or a commercial enterprise.   The idea is to match as well as possible the actual use (utility) of the asset  to its change or reduction in fair market value due to that utility.   This estimate is...

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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)

Treasury Stock

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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