When it comes to purchasing, it’s something most companies do at least as often (if not more often) than they sell. I would say that accounting entries for recognizing a purchase take place the most in a company’s books. Continue reading
Category Archives: 2 Processes
Importance of closing an accounting period
The importance of closing accounts for a determined period derives from understanding the importance of financial reporting in the first place. Financial reporting is for having accurate accounts about a company and it’s performance. Without those the business could possibly go into bankruptcy since it’s not in compliance with regulations (i.e. not paying taxes in due time, in required amounts), it would be unable to meet it’s creditors demands due to insufficient cash flows and liquidity problems (since the accounts didn’t reflect accurate demand of raw material for an example and the company kept purchasing more when it didn’t need this much goods). These effects in turns impact people, they would lose their jobs and so on. Continue reading
Definition of an accounting period
First and foremost it’s important to understand the definition of a period. A reporting or an accounting period is not just a year, it’s not just a quarter, but usually the shortest period measured is a month. Continue reading
Planning for the stock count
When planning for a stock count, it’s important to agree on the timing with the needs of the business and accounting. It’s also crucial to agree on items which are to be counted, teams counting and other relevant procedures, i.e. how exactly this counting should be performed. Continue reading
General considerations
General considerations that should be made for a stock count revolve around items themselves.
The key questions that need to be answered are as follows: Continue reading
Stock count
Why would you perform a stock count procedure?
There are two reasons you might and should do it. Remember that stock count is not just for the ‘checkmark’, but for actually providing the company’s accounting and management with relevant information – accurate positions in stock and understanding whether there’s anything missing (that is there haven’t been any thefts) or if there’s something that’s actually long standing and if the net realisable value of such items has actually dropped below the currently recognized cost. Continue reading
Handling supplier invoices
Do you think that supplier invoices are something that can be thrown around and just laying somewhere? Are supplier invoices obsolete once they’re paid? How do you handle them in order to achieve timely payment?
First and foremost, keeping accounting documents (that is all documents you’ve used for your accounting entries within your financial statements) for a certain required period can only be achieved if those documents are not just somewhere, but in a safe place. Normally the period you’re required to retain those documents is measured in years so think about that when choosing this place. Continue reading