Accounting’s primary principle is the measurement of economic activity. The American Institute of Certified Public Accountants provide the concepts and principles in measuring economic activity and how those financial transactions are recorded.
At the peak of the hierarchy of internal controls sits policies. Policies are written by the highest echelon of management for a company, its Board of Directors or Trustees. The upper tier and mid level management of a business develop procedures to carry out the policies of the company.
Item codes are broken out into two distinct types: Sales (Revenue) and Cost Codes. The primary purpose is group values and units together in an account for evaluation purposes.
The President of the Ontario Center for Advanced Manufacturing stated that back in the early 80’s IBM Canada Ltd. ordered parts from a new supplier based out of Japan. The order allowed an acceptable tolerance of 1.5 percent (%) defective parts. The Japanese supplier sent the order in two separate packages. The second package had …
With small business it is very common to provide a vehicle to the owner and key employees. It is often done in the construction industry and transportation sector. The idea is to provide transportation for not only the convenience of the employer but as retention tool for employees. In general, the total costs to operate …
Bookkeeping – Employer Provided Vehicle (Lesson 94)Read More »
Other employer-provided benefits are composed of three groupings of benefits: Welfare Other (Life Insurance, Auto & Education) Fringe This lesson explains each group and illustrates how the accountant records the benefit for bookkeeping and payroll tax purposes. This lesson is a continuation of the benefits series including health, retirement; HSA, HRA and FSA’s; and cafeteria …
Bookkeeping – Other Employer Provided Benefits (Lesson 93)Read More »
Another performance ratio used in business is return on equity. It is similar to return on assets except return on equity uses one section of the bottom half of the balance sheet. This section is technical what the owner’s have rights along with the earnings of the business entity. Recall that the balance sheet formula …
Cafeteria plans, a.k.a. Section 125 plans, are employer sponsored benefit packages that allow employees to choose from a menu of options and allocate their allotted share to the items they pick. With this type of plan the employer agrees to an allowance per employee to contribute to the package. The employee may either take the allowance …
One of the drawbacks to the health insurance mandate for small business employers is the cost of the premium for the plan. Because the provider is spreading the actual cost of care for the plan among a small group, the volatility is higher. Therefore the risk to the provider is greater. To offset this increased …
Bookkeeping – Health Savings, Reimbursement and Flexible Spending Accounts (Lesson 91)Read More »
For the longest time the retirement benefit was the most important employee benefit to offer. Today it is number two behind health insurance which is mandated by law. Still, it is a sought after benefit by employees and an excellent recruitment and retention tool for employers. There are two broad groups of retirement plans. * …
Bookkeeping – Employer Provided Retirement Plans (Lesson 90)Read More »
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 …
Bookkeeping – Employee Health Insurance Mandate (Lesson 89)Read More »
