Author Archives: Karl

Checklist is always needed, regardless whether you’re making the Annual Report for the first or the tenth time

Every time I hear someone arguing that using the checklist is a waste of time I end up finding silly mistakes or simple things forgotten within an Annual Report. They are the bits that could have easily been avoided with using the checklist. Why people don’t use them? The reason is simple. They think, with being experienced and all that they already know everything that should be within an Annual Report and what may go wrong and so they don’t need the checklist to remind them. Fact of the matter is we’re all humans and make mistakes. The checklist is not a shameful thing to be using, it’s smart. Continue reading →

Your own prior year report is like a template for you, but what if you’re making your first?

Normally when preparing an Annual Report for another consecutive financial year you’d take your prior year’s report as a template, change numbers within tables and hopefully for the most part also inside texts. If not much has changed you get your report done very easy and quickly. Even if some text parts need to be changed or edited, it doesn’t take up much time. Continue reading →

Physical security of cash

Cash is a physical asset and very attractive at that if left on sight of others. It’s liquid and virtually not traceable if stolen so as such one is very tempted to take it if given the opportunity. You might think that most people aren’t of this sort, but the truth is that as people we are weak. We are more so if the temptation is right under our nose. So if anything, try not be the one giving the chance.

What to do with cash to keep it safe? I mean to keep it physically safe from prying eyes and hands. One obvious thing to note is that cash should be taken into bank as soon as possible and practicable. It’s probably the safest place you could keep it, however what to do outside the bank? Think through very hard who are those who you’d trust with cash – that’s the first thing. Secondly plan how much is really needed at the spot. All the excess and currently not in use should always be behind closed doors either in a security box or on it’s way to the bank really. Significant amount of physical cash is something very few companies really need (i.e. pawn houses, retail shops etc.). Continue reading →

Dealing with cash

Something to note when you’re dealing with cash is the fact that it needs to be well monitored and the security around it needs to be strict and tight.

It’s not so common for businesses nowadays to have actual cash in their possession. Unless it’s a shop or some sort of a stand that sells something on spot companies should only have cash on extraordinary cases and even then it should normally be deposited on a bank account. Why? Cash physically creates much unwanted attention. It’s easily accessible, usable right away for whichever personal agenda and hard to trace.

So as such the guidelines following are applicable to both cases – those dealing with cash on daily basis and those not so often.

First and foremost you’ve got to ensure the people dealing first hand with cash are knowledgeable of procedures in place and what’s more, also understand there are sanctions enforced when they’re unable to comply with those rules.  Continue reading →

I charged my expense onto a wrong account!

Not to worry. It happens with the best of us. There may be situations where the wrong account is an income statement one, the balance sheet one or even both. No matter the situation, it’s remedied.

First things first, you have to undo the initial entry by taking it back (by decreasing the payable you booked and taking also back the expense you charged):

Db Payable / Liability account
Cr Expense account

And then after you’ve made sure the accounts are correct this time, make the entry once more, but a correct one this time:

Db Expense account
Cr Payable / Liability account

With this you’ve now charged the expense onto the right account and booked the payable for it just as well. Continue reading →

Reversing expenses

In a situation where you’ve once booked an expense for a certain event, purchase etc. and it later on turns out there isn’t going to be a need for it either in full amount or not at all you’ve got to reverse the expense. Note here that you’ve essentially done nothing wrong that is to say that you do not need to go back and start making adjustments. No. Why? Simply because of the fact that it was your best estimate at the time and as such there’s no reason to go and adjust for it, but merely if need be reverse the expense in the period it became apparent that the actual amount is going to be of less or none at all.

Reversing an expense is actually really easy if you think about it. Normally you’d make the following entry to book for an expense:

Db Expense account
Cr Payable / Liability account

Now in a case you want to take back some or all of the expense your new entry is as follows: Continue reading →