Bookkeeping For Canadians FOR Dummies Book

Bookkeeping For Canadians FOR Dummies Book
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    Lita Epstein, MBACécile Laurin, CALearn to:• Keep track of transactions• Produce financial statements• Manage a business• Follow government tax rulesBookkeepingFor Canadians Making Everything Easier!™ Open the book and find:• How to keep track of transactions• The top...

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    Start with FREE Cheat SheetsCheat Sheets include • Checklists • Charts • Common Instructions • And Other Good Stuff!Get Smart at Dummies.com Dummies.com makes your life easier with 1,000s of answers on everything from removing wallpaper to using the latest version of Windows. Check out ou...

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    Bookkeeping For CanadiansFORDUMmIES‰01_737620-ffirs.indd i01_737620-ffirs.indd i11/18/09 12:50 PM11/18/09 12:50 PM

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    01_737620-ffirs.indd ii01_737620-ffirs.indd ii11/18/09 12:50 PM11/18/09 12:50 PM

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    by Lita Epstein, MBACécile Laurin, CABookkeeping For CanadiansFORDUMmIES‰01_737620-ffirs.indd iii01_737620-ffirs.indd iii11/18/09 12:50 PM11/18/09 12:50 PM

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    Bookkeeping For Canadians For Dummies®Published byJohn Wiley & Sons Canada, Ltd.6045 Freemont Blvd.Mississauga, ON L5R 4J3www.wiley.comCopyright © 2010 by John Wiley & Sons Canada, Ltd. All rights reserved. No part of this book, including interior design, and icons, may be reproduced o...

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    About the AuthorsLita Epstein earned her MBA from Emory University’s Goizueta Business School. She designs and teaches online courses on topics such as investing for retirement, getting ready for tax time, and finance and investing for women. She’s written more than ten books, including Stree...

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    DedicationLita: To my father, Jerome Kirschbrown, who taught me the impor-tance of accounting, bookkeeping, and watching every detail.Cécile: For my son, Marc and my daughter Marie.Authors’ AcknowledgmentsLita: I want to take this opportunity to thank all the people who have helped make this b...

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    01_737620-ffirs.indd vii01_737620-ffirs.indd vii11/18/09 12:50 PM11/18/09 12:50 PM

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    Publisher’s AcknowledgmentsWe’re proud of this book; please send us your comments through our online registration form located at http://dummies.custhelp.com. For other comments, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at 317-572-3993, or ...

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    Contents at a GlanceIntroduction ................................................................ 1Part I: Basic Bookkeeping: Why You Need It ........................ 7Chapter 1: So You Want to Do the Books ....................................................................... 9Chapter 2: Gettin...

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    Part VI: The Part of Tens .......................................... 321Chapter 23: Top Ten Ways to Manage Your Business Cash with Your Books ...... 323Chapter 24: Top Ten Most Important Accounts for Any Bookkeeper .................... 327Appendix: Glossary ..........................................

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    Table of ContentsIntroduction ................................................................. 1About This Book .............................................................................................. 2Conventions Used in This Book .............................................................

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    Bookkeeping For Canadians For Dummies xiiChapter 2: Getting Down to Bookkeeping Basics . . . . . . . . . . . . . . . . .25Bookkeepers: The Record Keepers of the Business World ...................... 25Wading through Basic Bookkeeping Lingo ................................................. 26Acco...

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    xiii Table of ContentsKeeping Track of Purchases ......................................................................... 82Dealing with Transactions that Don’t Fit .................................................... 84Posting Journal Information to Accounts .....................................

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    Bookkeeping For Canadians For Dummies xivChapter 9: Counting Your Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139Collecting on Cash Sales ............................................................................. 139Discovering the value of sales receipts ................

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    xv Table of ContentsPart IV: Preparing the Books for Year’s (or Month’s) End ..................................................... 183Chapter 12: Depreciating Your Assets . . . . . . . . . . . . . . . . . . . . . . . . . .185Defi ning Depreciation ...............................................

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    Bookkeeping For Canadians For Dummies xviChapter 16: Checking Your Accuracy — By Trial and Hopefully No Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237Working with a Trial Balance ..................................................................... 237Bu...

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    xvii Table of ContentsDeciphering Gross Profi t ............................................................................ 285Monitoring Expenses ................................................................................... 286Using the Income Statement to Make Business Decisions ...........

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    Bookkeeping For Canadians For Dummies xviiiPaying Bills Accurately and on Time ........................................................ 325Planning Profi ts ............................................................................................ 325Comparing Budget to Actual Expenses ...........

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    IntroductionBookkeepers manage all the financial data for small businesses. If you subscribe to the idea that information is power (which we do), you agree that the bookkeeper has a tremendous amount of power within a busi-ness. Information tracked in the books helps business owners make key deci...

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    2Bookkeeping For Canadians For Dummies About This BookIn this book, we introduce you to the key aspects of bookkeeping and how to set up and use your financial books. We walk you through the basics of book-keeping, starting with the process of setting up your business’s books and developing ✓...

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    3 IntroductionFoolish AssumptionsWhile writing this book, we made some key assumptions about who you are and why you’ve picked up this book to get a better understanding of book-keeping. We assume that you’re either ✓ A business owner who wants to know how to do your own books. You have a g...

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    4Bookkeeping For Canadians For Dummies Part I: Basic Bookkeeping: Why You Need ItIn Part I, we discuss the importance of bookkeeping, explain how it works, and help you get started with setting up your business’s books. We also touch on the terms that are unique to bookkeeping and tell you how ...

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    5 IntroductionPart V: Reporting Results and Starting OverIn Part V, we tell you how to use all the information in your books to prepare reports that show how well your business did during the month, quarter, or year. We also lay out all the paperwork that you have to deal with, including year-end...

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    6Bookkeeping For Canadians For Dummies Where to Go From HereCan you feel the excitement? You’re now ready to enter the world of book-keeping! Because of the way Bookkeeping For Canadians For Dummies is set up, you can start anywhere you want.If you need the basics — or if you’re a little ru...

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    Part IBasic Bookkeeping: Why You Need It04_737620-pp01.indd 704_737620-pp01.indd 711/18/09 12:49 PM11/18/09 12:49 PM

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    In this part . . .Not sure why bookkeeping is important? In this part, we explain the basics of how bookkeeping works and help you get started with the task of setting up your books.This part also exposes you to terms that you may already know but which have a unique meaning in the world of bookk...

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    Chapter 1So You Want to Do the BooksIn This Chapter▶ Introducing bookkeeping and its basic purpose▶ Maintaining a paper trail▶ Managing daily business finances▶ Making sure everything’s accurate▶ Putting on a financial show▶ Getting ready to report to the governmentFew small-busines...

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    10 Part I: Basic Bookkeeping: Why You Need It Bookkeeping, when done properly, gives you an excellent gauge of how well your business is doing. It also provides you with a lot of information throughout the year so that you can test the financial success of your busi-ness strategies and make cours...

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    11 Chapter 1: So You Want to Do the BooksThe formula for keeping your books in balance involves these three elements:Assets = Liabilities + EquityBecause balancing your books is so important, we talk a lot about how to keep your books in balance throughout this book. You can find an initial intro...

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    12 Part I: Basic Bookkeeping: Why You Need It Recognizing the Importance of an Accurate Paper TrailTo keep the books, you need to create an accurate paper trail. You want to track all your business’s financial transactions so that if a question comes up at a later date, you can turn to the book...

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    13 Chapter 1: So You Want to Do the BooksFor example, almost every business has a Cash Receipts Journal in which to keep the detail for all incoming cash and a Cash Disbursements Journal in which to keep the detail for all outgoing cash. Other journals can detail sales, purchases, customer accoun...

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    14 Part I: Basic Bookkeeping: Why You Need It Using Bookkeeping’s Tools to Manage Daily FinancesAfter you set up your business’s books and put in place your internal con-trols, you’re ready to use the systems you established to manage the day-to-day operations of your business. You can quic...

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    15 Chapter 1: So You Want to Do the BooksIf you find you need to offer discounts more frequently in order to encour-age sales, you may need to review your pricing, and you definitely need to research market conditions to determine the cause of this sales weakness. New activities by an aggressive ...

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    16 Part I: Basic Bookkeeping: Why You Need It Proving out your cashThe first step in testing out your books includes proving that you accurately recorded your cash transactions. This process involves checking a number of different transactions and elements, including the cash taken in on a daily ...

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    17 Chapter 1: So You Want to Do the BooksPreparing financial reportsMost businesses prepare at least two key financial reports, the balance sheet and the income statement, which you can show to outsiders, including the financial institutions from which your business borrows money and your busines...

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    18 Part I: Basic Bookkeeping: Why You Need It Getting a Business Number (BN)Any business that deals with payroll taxes, Goods and Services Tax or Harmonized Sales Tax (GST/HST) collection, or importing or exporting goods requires a nine-digit Business Number (BN), which the Canada Revenue Agency ...

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    19 Chapter 1: So You Want to Do the Books Figure 1-1: Page one of the Request for a Business Number form. (specify: )Owner(s) information – Complete this part to provide information for the individual owner, partner(s), corpo...

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    20 Part I: Basic Bookkeeping: Why You Need It Figure 1-2: Page two of the Request for a Business Number form. Your name:Postal or zip codePostal or zip codeName Physical business location Mailing address (if different from the physical business location)c/oA3 Identification of businessOperati...

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    21 Chapter 1: So You Want to Do the Books Figure 1-3: Page three of the Request for a Business Number form. DDMMDDMMDDMMYYYMonthlyEnter the amount of your worldwide sales (dollar amount only)Part B – GST/HST account information – Complete a separate form for each division of your corporation ...

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    22 Part I: Basic Bookkeeping: Why You Need It Figure 1-4: Page four of the Request for a Business Number form. DDMMYYYYPostal or zip codePostal or zip codeAccount name Physical business locationMailing address (if different from the physical business location) for payroll deduction purposesc/oC1...

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    23 Chapter 1: So You Want to Do the Books Figure 1-5: Page five of the Request for a Business Number form. DDMMYYYPart D – Import/export account information – Complete D1 and D2 if you need a BN import/export account for commercial purposes (you donot need to register for an import/export acc...

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    24 Part I: Basic Bookkeeping: Why You Need It You can get the scoop on the requirements and obligations of operating a payroll in Chapter 10 and how to remit payroll-related taxes and benefits in Chapter 11. We look at the requirements and obligations concerning GST/HST in Chapter 5 and explore h...

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    Chapter 2Getting Down to Bookkeeping BasicsIn This Chapter▶ Keeping (and understanding) business records▶ Navigating the accounting cycle▶ Choosing accrual accounting, rather than cash-basis accounting▶ Deciphering double-entry bookkeeping▶ Knowing your debits from your creditsAll busin...

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    26 Part I: Basic Bookkeeping: Why You Need It Bookkeepers are the ones who toil day in and day out to ensure that transac-tions are captured and accurately recorded. Bookkeepers need to be very detail-oriented and love to work with numbers because numbers and the accounts they go into are just ab...

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    27 Chapter 2: Getting Down to Bookkeeping BasicsAccounts for the balance sheetHere are a few terms you need to know to understand the common elements of all balance sheets: ✓ Balance sheet: The financial statement that presents a snapshot of the business’s financial position (assets, liabilit...

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    28 Part I: Basic Bookkeeping: Why You Need It ✓ Revenue: All money collected in the process of selling the business’s goods and services. Some businesses also collect revenue through other means, such as collecting rent, selling assets that the business no longer needs, or earning interest b...

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    29 Chapter 2: Getting Down to Bookkeeping Basicsown one of those classic cars that goes up in value). Every major asset a business owns ages and eventually needs replacement, including build-ings, factories, equipment, and other key assets. (We discuss how you monitor depreciation in Chapter 12.)...

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    30 Part I: Basic Bookkeeping: Why You Need It Figure 2-1: The accounting cycle. 1. Transactions2. Journal Entries3. Posting7. Financial Statements4. Trial Balance8. Closing the Books6. Adjusting JournalEntries5. WorksheetThe Accounting CycleHere’s a breakdown of each step in this cycle: 1. Tra...

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    31 Chapter 2: Getting Down to Bookkeeping Basicscalculate a trial balance. (Your accounting software might produce this trial balance automatically.) 5. Worksheet: Unfortunately, many times, your first calculation of the trial balance shows that the books aren’t in balance. If that’s the case...

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    32 Part I: Basic Bookkeeping: Why You Need It suggest that your business adopt accrual accounting. In the following sections, we look at both methods.Cash-basis accountingWith cash-basis accounting, you record all transactions in the books when cash actually changes hands, meaning when the busine...

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    33 Chapter 2: Getting Down to Bookkeeping BasicsRecording by using accrual accountingWith accrual accounting, you record all transactions in the books when those transactions occur, even if no cash changes hands. For example, if you sell on account, you record the transaction immediately and ente...

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    34 Part I: Basic Bookkeeping: Why You Need It When it comes to double-entry bookkeeping, the key formula for the balance sheet (Assets = Liabilities + Equity) plays a major role. Accountants call this formula the accounting equation.In order to adjust the balance of accounts in the bookkeeping w...

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    35 Chapter 2: Getting Down to Bookkeeping BasicsIn this case, the books stay in balance because the exact dollar amount that increases the amount of your Furniture account decreases the amount of your Cash account. At the bottom of any journal entry, you should include a brief explanation of the ...

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    36 Part I: Basic Bookkeeping: Why You Need It Differentiating Debits and CreditsBecause bookkeeping’s debits and credits are different than the ones you’re used to encountering in everyday life, you’re probably wondering how you’re supposed to know whether a debit or credit will increase ...

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    Chapter 3Outlining Your Financial Roadmap with a Chart of AccountsIn This Chapter▶ Introducing the Chart of Accounts▶ Reviewing the types of accounts that make up the chart▶ Creating your own Chart of AccountsCan you imagine the mess your chequebook would be if you didn’t record each cheq...

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    38 Part I: Basic Bookkeeping: Why You Need It entered into that account. Every business creates its own Chart of Accounts based on how the business is operated, so you’re unlikely to find two busi-nesses with the exact same Chart of Accounts.However, some basic organizational and structural cha...

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    39 Chapter 3: Outlining Your Financial Roadmap with a Chart of AccountsWhen developing the Chart of Accounts, start by listing all the Asset accounts, the Liability accounts, the Equity accounts, and Drawings accounts (if applicable for unincorporated businesses), the Revenue accounts, and finall...

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    40 Part I: Basic Bookkeeping: Why You Need It We discuss the balance sheet in greater detail in Chapter 18, including how you prepare and use it. The following sections, however, examine the basic components of the balance sheet, as reflected in the Chart of Accounts.Tackling assetsFirst on the c...

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    41 Chapter 3: Outlining Your Financial Roadmap with a Chart of Accounts ✓ Prepaid Insurance: This account tracks insurance you pay in advance, which you reduce each month with a credit to represent that month’s insurance coverage. For example, if you own a building and prepay one year in adva...

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    42 Part I: Basic Bookkeeping: Why You Need It Your business might also have extra cash that it invests in the shares of other businesses, in long-term investments in land, or in other types of assets that might earn some interest income. If your business intends to hold these assets for long peri...

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    43 Chapter 3: Outlining Your Financial Roadmap with a Chart of Accounts ✓ Patents: This account tracks the costs associated with patents, grants made by governments that guarantee to the inventor or the owner of the patent of a product or process the exclusive right to make, use, and sell that ...

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    44 Part I: Basic Bookkeeping: Why You Need It Current liabilitiesCurrent liabilities are debts due in the next 12 months. Some of the most common types of Current Liabilities accounts that appear on the Chart of Accounts are ✓ Accounts Payable: This account tracks money owed that the business m...

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    45 Chapter 3: Outlining Your Financial Roadmap with a Chart of AccountsLong-term liabilitiesLong-term liabilities are debts due in more than 12 months. The number of long-term liability accounts you maintain on your Chart of Accounts depends on your debt structure. The two most common types of lo...

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    46 Part I: Basic Bookkeeping: Why You Need It ✓ Drawings: Only businesses that aren’t incorporated need this account. The Drawings account tracks any money or other assets that a business owner takes out of the business. If the business has several partners, each partner gets her own Drawing...

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    47 Chapter 3: Outlining Your Financial Roadmap with a Chart of AccountsWhen you examine an income statement from a business other than the one you own or are working for, you usually see the following accounts summa-rized as one line item called Revenue or Net Revenue. Because sales of prod-ucts ...

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    48 Part I: Basic Bookkeeping: Why You Need It Acknowledging the money you spendExpense accounts take the cake for the longest list of individual accounts. Any money you spend on the business that you can’t tie directly to the sale of an individual product falls under the Expense account categor...

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    49 Chapter 3: Outlining Your Financial Roadmap with a Chart of Accountskeep the business’s doors open. In such a case, you can use the insurance proceeds to cover those expenses. ✓ Legal and Accounting: This account tracks any money that a business pays for legal or accounting advice. ✓ Mai...

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    50 Part I: Basic Bookkeeping: Why You Need It ✓ Travel and Entertainment: This account tracks money spent for business purposes on travel or entertainment. Some businesses separate these expenses into several accounts, such as Travel and Entertainment — Meals, Travel and Entertainment — Tr...

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    51 Chapter 3: Outlining Your Financial Roadmap with a Chart of Accounts ✓ Equity accounts: 3,000 to 3,999 ✓ Sales and Cost of Goods Sold accounts: 4,000 to 4,999 ✓ Expense accounts: 5,000 to 6,999This numbering system matches the one used by computerized accounting systems, making it easy f...

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    52 Part I: Basic Bookkeeping: Why You Need It 07_737620-ch03.indd 5207_737620-ch03.indd 5211/18/09 12:50 PM11/18/09 12:50 PM

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    Part IIKeeping a Paper Trail08_737620-pp02.indd 5308_737620-pp02.indd 5311/18/09 12:48 PM11/18/09 12:48 PM

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    In this part . . .Believe or not, correctly entering your financial trans-actions in the books is a science. This part introduces you to the basics of entering financial transactions, post-ing transactions to your General Ledger (the granddaddy of your bookkeeping system), and tracking all the tr...

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    Chapter 4Ledgers: A One-Stop Summary of Your Business TransactionsIn This Chapter▶ Understanding the value of the General Ledger▶ Developing ledger entries▶ Posting entries to the ledger accounts▶ Adjusting the General Ledger▶ Creating ledgers in computerized accounting softwareAs a boo...

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    56 Part II: Keeping a Paper Trail Instead, the General Ledger serves as the figurative eyes and ears of book-keepers and accountants who want to know what financial transactions have taken place historically in a business. By reading the General Ledger — not exactly interesting reading, unless ...

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    57 Chapter 4: Ledgers: A One-Stop Summary of Your Business Transactions The debits and credits in this example entry are in balance — $2,900 each. Remember, all entries to the General Ledger must be balanced entries. That’s the cardinal rule of double-entry bookkeeping. Note, too, that we ind...

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    58 Part II: Keeping a Paper Trail Figure 4-1: A Cash Disbursements jour-nal keeps track of all cash trans-actions involving cash sent out of the business. This figure shows how to summarize those trans-actions so that they can be posted to the General Ledger. Figure 4-2 shows the Sales journal f...

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    59 Chapter 4: Ledgers: A One-Stop Summary of Your Business Transactions Figure 4-2: A Sales journal keeps track of sales transactions on account. This figure shows how to summarize those trans-actions so that you can post them to the General Ledger. The following General Ledger entry is based on ...

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    60 Part II: Keeping a Paper Trail AccountDebitCreditAccounts Receivable$800 Sales$800This entry is balanced. The Accounts Receivable account is increased to show that customers owe the business money because they bought items on account. The Sales account is increased to show that even though no ...

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    61 Chapter 4: Ledgers: A One-Stop Summary of Your Business Transactionsaccounts both decrease to show that the business no longer owes or is owed that money. The Vehicles account increases to show new business assets, and the H.G. Capital account (which is where the owner’s deposits into the bu...

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    62 Part II: Keeping a Paper Trail Figure 4-4: A General journal keeps track of all mis-cellaneous transactions that aren’t tracked in a specific journal, such as a Sales journal or a Purchases journal. This figure shows how to summa-rize those transactions so that you can post them to the Gene...

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    63 Chapter 4: Ledgers: A One-Stop Summary of Your Business TransactionsPosting Entries to the General LedgerAfter you summarize your journals and develop all the entries you need for the General Ledger (see the preceding section), you post your entries into the General Ledger accounts. When posti...

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    64 Part II: Keeping a Paper Trail Figure 4-5: The Cash account in the General Ledger. The Accounts Receivable account (see Figure 4-6) increases with debits and decreases with credits. Ideally, this account also has a debit balance that indicates the amount still due from customer purchases. If ...

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    65 Chapter 4: Ledgers: A One-Stop Summary of Your Business Transactions Figure 4-6: The Accounts Receivable account in the General Ledger. The Accounts Payable account (see Figure 4-7) increases with credits and decreases with debits. Normally this account has a credit balance because the busines...

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    66 Part II: Keeping a Paper Trail Figure 4-7: The Accounts Payable account in the General Ledger. 09_737620-ch04.indd 6609_737620-ch04.indd 6611/18/09 12:47 PM11/18/09 12:47 PM

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    67 Chapter 4: Ledgers: A One-Stop Summary of Your Business TransactionsThese three accounts — Cash, Accounts Receivable, and Accounts Payable — are part of the balance sheet, which we explain fully in Chapter 18. Asset accounts on the balance sheet usually carry debit balances because they re...

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    68 Part II: Keeping a Paper Trail the Equity account called Retained Earnings, which tracks how much of your business’s profits the owners reinvested into the business to grow the busi-ness. If the business lost money and the bottom line of the income statement shows that cost and expenses exce...

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    69 Chapter 4: Ledgers: A One-Stop Summary of Your Business TransactionsIf your business earns a profit at the end of the accounting period, the Retained Earnings account increases thanks to a credit from the Sales account. If you lose money, your Retained Earnings account decreases. Because the R...

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    70 Part II: Keeping a Paper Trail ✓ Deleting and inactivating an account: Delete accounts only if they’ve never been used in transactions. Instead of deleting an account in your chart, you should inactivate it. We show you the type of entries you need to make in the General Ledger in the fol...

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    71 Chapter 4: Ledgers: A One-Stop Summary of Your Business Transactions 2. Double-click the account for which you want more detail. In Figure 4-10, we look into Accounts Payable and see the transactions for March that were entered when the business paid the bills. Figure 4-10: Peek inside the Ac...

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    Chapter 5Keeping JournalsIn This Chapter▶ Starting things off with point of original entry▶ Tracking cash, sales, and purchases▶ Posting to the appropriate accounts▶ Simplifying the journals process with computers▶ Getting around to charging taxesWhen it comes to doing your books, you m...

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    74 Part II: Keeping a Paper Trail Establishing a Transaction’s Point of EntryIn most businesses that don’t use computerized bookkeeping programs, a transaction’s original point of entry into the bookkeeping system is through a system of journals.Each transaction goes in the appropriate jour...

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    75 Chapter 5: Keeping Journals If you monitor cash transactions by checking your business’s bank account activity via the Internet, watch out. Banks are bound to have delays in pro-cessing cheques that your business issues to its vendors and suppliers, so the bank account balance looks higher t...

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    76 Part II: Keeping a Paper Trail Figure 5-1: The first point of entry for incoming cash is the Cash Receipts journal. ✓ General Credit: Transactions that don’t have their own columns; these transactions are entered individually into the accounts affected. For example, according to Figure 5...

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    77 Chapter 5: Keeping JournalsCapital account at the end of the month because the H.G. Capital account tracks all information about investments of assets that H.G. makes into the business. ✓ Accounts Receivable Credit: Any transactions that are posted to the Accounts Receivable account (which t...

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    78 Part II: Keeping a Paper Trail In the Cash Disbursements journal, the Cash account is always the credit, and the debits vary, depending on the outstanding debt or expense the business is paying. Figure 5-2 shows you a series of transactions in a Cash Disbursements journal. Figure 5-2: The firs...

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    79 Chapter 5: Keeping JournalsThe Cash Disbursements journal in Figure 5-2 has eight columns of information: ✓ Date ✓ Account Debited: The name of the account debited, as well as any detail about the reason for the debit. ✓ Cheque #: The number of the cheque used to pay the debt. ✓ PR (po...

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    80 Part II: Keeping a Paper Trail Managing Sales Like a ProNot all sales involve the collection of cash; many stores allow customers to buy products on account by using a store credit card. (We’re not talking about purchases customers make by using a bank-issued credit card, here; in that case,...

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    81 Chapter 5: Keeping Journals Figure 5-3: The first point of entry for sales made on account is the Sales journal. 10_737620-ch05.indd 8110_737620-ch05.indd 8111/18/09 12:51 PM11/18/09 12:51 PM

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    82 Part II: Keeping a Paper Trail The Sales journal in Figure 5-3 has six columns of information: ✓ Date ✓ Customer Account Debited: The name of the customer whose account you should debit. ✓ PR (post reference) ✓ Invoice Number: The invoice number for the purchase. ✓ Accounts Receivabl...

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    83 Chapter 5: Keeping JournalsFigure 5-4 shows some store purchase transactions as they appear in the business’s Purchases journal. Figure 5-4: The first point of entry for purchases bought on credit is the Purchases journal. 10_737620-ch05.indd 8310_737620-ch05.indd 8311/18/09 12:51 PM11...

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    84 Part II: Keeping a Paper Trail The Purchases journal in Figure 5-4 has six columns of information: ✓ Date ✓ Supplier/Vendor Account Credited: The name of the vendor from whom the business made the purchases. ✓ PR (post reference) ✓ Invoice Number ✓ Purchases Debit: Increases to the P...

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    85 Chapter 5: Keeping Journalsof transactions. For example, you find only sales transactions in the Sales journal and purchase transactions in the Purchase journal; you could find any type of transaction in the General journal affecting many less-active accounts. ✓ PR (post reference) ✓ Gener...

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    86 Part II: Keeping a Paper Trail Blue Book at www.kbb.com.) Print the page when you find the fair value that you use to record the investment of the vehicle. Canada Revenue Agency (CRA) might want to have a look at your research later on when they pay you a visit. Figure 5-5: The point of entry ...

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    87 Chapter 5: Keeping JournalsIn addition to the five columns mentioned in the preceding bullet list, the General journal in Figure 5-5 has the following two columns: ✓ Accounts Payable Debit: Decreases to the Accounts Payable account. The bookkeeper working with this journal anticipated that ...

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    88 Part II: Keeping a Paper Trail 4. In the PR column of the journal, record information about where the entry is posted. If you summarize and total the entry that you plan to post to the accounts at the bottom of the page, you can just put a check mark next to the entry in the PR column. For t...

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    89 Chapter 5: Keeping Journalstime-consuming. Luckily, most businesses today use computerized account-ing software, so you don’t need to enter the same information so many times. The computer does the work for you. Figure 5-6: Summary of Cash Receipts journal entries after the first five days. ...

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    90 Part II: Keeping a Paper Trail If you’re working with a computerized accounting software package (which we discuss in Chapter 6), you have to enter a transaction only once. The soft-ware automatically posts all the detail that you need to enter into the pen-and-paper journal pages; General L...

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    91 Chapter 5: Keeping JournalsWhen you use a software package to track your cash receipts, the software automatically updates the following accounts: ✓ The Cash account is debited the appropriate amount. ✓ The Accounts Receivable account is credited the appropriate amount. ✓ The correspondi...

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    92 Part II: Keeping a Paper Trail The bill-paying perks of this system include ✓ The software package can automatically print cheques. ✓ Each of the vendor accounts updates to show that your business has made the payment. ✓ The Accounts Payable account is debited the appropriate amount for ...

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    93 Chapter 5: Keeping Journals Figure 5-9 shows sales tax automatically calculated by QuickBooks based on the S code (which stands for Standard) that appears under the tax column for the item sold, which means you must charge both GST and PST.Filling out the invoice in the accounting system also ...

  • Page 114

    94 Part II: Keeping a Paper Trail Goods and Services Tax or Harmonized Sales Tax (GST/HST)If you bring in more than $30,000 for goods or services rendered, you have to become a registrant and charge the GST/HST tax. (Even if you don’t have revenues of $30,000 a year, you may want to register ...

  • Page 115

    95 Chapter 5: Keeping Journals In any given month, you probably (hopefully!) charge more GST than you pay. So, by the end of that month, you end up owing the net amount of money (the amount you charged minus the amount you paid) to the government. ✓ At the end of your reporting period (the len...

  • Page 116

    96 Part II: Keeping a Paper Trail 10_737620-ch05.indd 9610_737620-ch05.indd 9611/18/09 12:51 PM11/18/09 12:51 PM

  • Page 117

    Chapter 6Computer Options for Your BookkeepingIn This Chapter▶ Finding the right accounting software for your business▶ Getting your computerized books up and runningAvery few small-business owners who have been around awhile still do things the old-fashioned way — keep their books in paper...

  • Page 118

    98 Part II: Keeping a Paper Trail Luckily, as a small-businessperson, you probably don’t need all the bells and whistles offered by the top-of-the-line programs. Instead, two software programs that we review in this chapter can meet the needs of most small-businesspeople. Using one of the two s...

  • Page 119

    99 Chapter 6: Computer Options for Your BookkeepingIf you’re working with another software system to manage your business data and want to switch to Simply Accounting Pro, you may be able to import that data directly into Simply Accounting. (You can find information about how to import data inc...

  • Page 120

    100 Part II: Keeping a Paper Trail Setting Up Your Computerized BooksAfter you pick your software, the hard work is done because actually setting up the package probably takes you less time than researching your options and picking your software. Both packages we discuss in this chapter (see the ...

  • Page 121

    101 Chapter 6: Computer Options for Your BookkeepingFigure 6-1 shows you QuickBooks’s EasyStep Interview screen, where we enter an income account as an example. Figure 6-1: As part of the initial interview in QuickBooks, the system helps you generate a Chart of Accounts. After your Chart of Acc...

  • Page 122

    102 Part II: Keeping a Paper Trail Figure 6-2: QuickBooks’ EasyStep Interview asks your taxation year, the province in which you operate, and your business number (BN). Customizing software to match your operationsAfter you set up the basics (see the preceding section), you can customize the s...

  • Page 123

    103 Chapter 6: Computer Options for Your BookkeepingAfter you enter your bank and other financial information, you can enter data unique to your business. If you want to use the program’s budgeting features, you enter your budget information before entering other data. (We show you how to enter...

  • Page 124

    104 Part II: Keeping a Paper Trail you have to add all the transactions that occurred between March 1 and March 15 into your new system. You might even have to go back to the begin-ning of the fiscal year. You can make the process much easier by waiting until April 1 to get started, even if you b...

  • Page 125

    Chapter 7Controlling Your Books, Your Records, and Your MoneyIn This Chapter▶ Protecting your business’s cash▶ Maintaining proper paperwork▶ Divvying up responsibilities▶ Insuring your cash handlersEvery business takes in cash in some form. Whether in the form of dollar bills, cheques, ...

  • Page 126

    106 Part II: Keeping a Paper Trail Putting Controls on Your Business’s CashThink about how careful you are with your personal cash. You find various ways to protect how you carry it around, you dole it out carefully to your family members, and you may even hide cash in a safe place in the house...

  • Page 127

    107 Chapter 7: Controlling Your Books, Your Records, and Your Moneycash used to fill the cash registers with floats, petty cash accounts, payments sent out to pay business obligations, or any other cash need, this cash enters and exits your chequing account. So, you use your chequing account as y...

  • Page 128

    108 Part II: Keeping a Paper Trail If you plan to write your cheques, you most likely use a business cheque that has a stub attached, to the left of the cheque. The supplier of cheques can offer you a three-ring binder to hold your cheques, which come in sheets of one or two cheques. The cheque-a...

  • Page 129

    109 Chapter 7: Controlling Your Books, Your Records, and Your MoneyArranging deposits to the chequing accountOf course, you don’t just withdraw from your business’s chequing account (that would be a big problem). You also need to deposit money into that account, and you want to be sure your d...

  • Page 130

    110 Part II: Keeping a Paper Trail Savings accountsSome businesses find that they have more cash than they need to meet their immediate plans. Rather than keep that extra cash in a non-interest-bearing account, many businesses open a savings account to store the extra cash stash.If you’re a sma...

  • Page 131

    111 Chapter 7: Controlling Your Books, Your Records, and Your MoneyYou can best control petty cash by picking one person in the office to manage the use of petty cash. Before giving that person more cash, she should be able to prove the absence of cash used and why it was used. Whenever someone i...

  • Page 132

    112 Part II: Keeping a Paper Trail In addition to having the proper amount of cash in the register so that your business can give customers the change they need, you also must make sure that your cashiers are giving the right amount of change and actually recording all sales on their cash registe...

  • Page 133

    113 Chapter 7: Controlling Your Books, Your Records, and Your Money ✓ They record a false credit voucher and keep the cash for themselves. In this case, the cashier writes up a credit voucher for a nonexistent cus-tomer and then pockets the cash himself. Most stores control this prob-lem by usi...

  • Page 134

    114 Part II: Keeping a Paper Trail Creating a filing systemTo get started setting up your filing system, you need some supplies: ✓ Filing cabinets: This one’s pretty self-explanatory — it’s hard to have a filing system if you don’t have anything to keep the files in . . . ✓ File folde...

  • Page 135

    115 Chapter 7: Controlling Your Books, Your Records, and Your Money • Twelve-month file: Use this file to keep track of bills that you need to pay. Simply place the bill in the slot for the month in which it’s due. Many businesses also use a 30-day expandable file. At the beginning of the mon...

  • Page 136

    116 Part II: Keeping a Paper Trail If you find that a certain type of record takes up a lot of storage space, you may destroy those records at an earlier time than we recommend in this section if you receive written permission from CRA. Retailers, for example, may not want to hang on to the cash...

  • Page 137

    117 Chapter 7: Controlling Your Books, Your Records, and Your MoneyFacing the reality of financial fraudThe four basic types of financial fraud are ✓ Embezzlement: Also called larceny, the illegal use of funds by a person who controls those funds. For example, a bookkeeper may use the busi-ness...

  • Page 138

    118 Part II: Keeping a Paper Trail facilitate the access. For example, say Business A wants to sell its prod-ucts to Business B. An employee in Business B helps Business A get in the door. Business A prices its product a bit higher and gives the employee of Business B that extra profit in the for...

  • Page 139

    119 Chapter 7: Controlling Your Books, Your Records, and Your Money ✓ Money-handling: Having direct contact with incoming cash or revenue, whether cheque, credit card, or credit transactions, as well as outgoing cash flow. The person who handles money directly, such as a cashier, shouldn’t be...

  • Page 140

    120 Part II: Keeping a Paper Trail ✓ Get to know your employees so that you can more easily detect signs of financial or other personal problems. Build up a rapport so that they feel free to discuss such issues with you in confidence. ✓ Examine all invoices and supporting data before you sig...

  • Page 141

    121 Chapter 7: Controlling Your Books, Your Records, and Your Money ✓ What do I estimate the loss to be? ✓ What will it cost me to implement the change in procedures to prevent or detect the problem?You can’t answers these questions all by yourself, so consult with your man-agers and the st...

  • Page 142

    122 Part II: Keeping a Paper Trail Employers bond employees who handle cash, as well as employees who may be in a position to steal something other than cash. For example, a janitorial service bonds its workers in case a worker steals something from one of its customers. If a customer reports som...

  • Page 143

    Part IIITracking Day-to-Day Business Operations with Your Books13_737620-pp03.indd 12313_737620-pp03.indd 12311/18/09 12:50 PM11/18/09 12:50 PM

  • Page 144

    In this part . . .Do you want to know every single financial transac-tion that happens in your business each and every day? You should. Tracking every transaction is the only way that you can put all the pieces together and see how well your business is doing financially.This part shows you how t...

  • Page 145

    Chapter 8Buying and Tracking Your PurchasesIn This Chapter▶ Tracking inventory and monitoring costs▶ Keeping your business supplied▶ Paying your billsIn order to make money, your business must have something to sell. Whether you sell products or offer services, you have to deal with costs d...

  • Page 146

    126 Part III: Tracking Day-to-Day Business Operations with Your Books Keeping Track of InventoryProducts that your business plans to sell are called inventory. As a book-keeper, you use two accounts to track inventory: ✓ Purchases: Where you record the actual cost from the purchase of goods tha...

  • Page 147

    127 Chapter 8: Buying and Tracking Your Purchasesas recorded in the Inventory account, and add the amount of purchases, as recorded in the Purchases account, to find the goods available for sale. Then, you subtract the Inventory on hand at the end of the month, which you deter-mine by counting th...

  • Page 148

    128 Part III: Tracking Day-to-Day Business Operations with Your Books When inventory enters your business, in addition to recording the actual costs, you need more detail about what the business bought, how much of each item it bought, and what each item cost. You also need to track ✓ How much ...

  • Page 149

    129 Chapter 8: Buying and Tracking Your Purchases Figure 8-1: Recording the receipt of inventory with a bill by using QuickBooks. Figure 8-2: Setting up an inventory item using QuickBooks. If you have a set contract purchase price or sales price on an inventory item, you can save time by enteri...

  • Page 150

    130 Part III: Tracking Day-to-Day Business Operations with Your Books As shown in Figure 8-2, you can track information about inventory on hand and when you need to reorder inventory by using this form. To be sure your store shelves are never empty, you can enter a number that indicates at what p...

  • Page 151

    131 Chapter 8: Buying and Tracking Your Purchases ✓ Specific Identification: You maintain cost figures for each inventory item individually. Retail outlets that sell big-ticket items, such as cars, use this type of inventory cost formula. In order to use this cost formula, the items that you se...

  • Page 152

    132 Part III: Tracking Day-to-Day Business Operations with Your Books If you think changing cost formulas is a big deal, you’re absolutely right. A change attracts a lot of attention to your business from investors or from the CRA, because they might think you are trying to manipulate the profi...

  • Page 153

    133 Chapter 8: Buying and Tracking Your PurchasesComparing the cost formulasTo show you how much of an effect inventory cost formulas can have on profit margin, in this section, we compare two of the most common cost for-mulas: FIFO and Averaging. In this example, we assume Business A bought the ...

  • Page 154

    134 Part III: Tracking Day-to-Day Business Operations with Your Books Remember, the cost-of-goods-sold number appears on the income statement, and you subtract it from sales. The ending-inventory number shows up as an asset on the balance sheet. For all three inventory cost formulas, the cost of...

  • Page 155

    135 Chapter 8: Buying and Tracking Your PurchasesTable 8-3 shows a comparison of gross profit for the two cost formulas used in this example scenario.Table 8-3 Comparison of Gross Profit Based on Inventory Cost FormulasIncome Statement Line ItemFIFOAveragingSales$19,000$19,000Cost of Goods Sold$...

  • Page 156

    136 Part III: Tracking Day-to-Day Business Operations with Your Books Staying on Top of Your BillsEventually, you have to pay for both the inventory and the supplies you pur-chase for your business. In most cases, you post the bills to the Accounts Payable account when they arrive, and you pay th...

  • Page 157

    137 Chapter 8: Buying and Tracking Your PurchasesOn the first day of that month, the Accounts Payable clerk pulls all the bills due that month and puts them in the daily accordion file based on the date the bill is due. The Accounts Payable clerk then mails payment cheques in time to arrive in th...

  • Page 158

    138 Part III: Tracking Day-to-Day Business Operations with Your Books 14_737620-ch08.indd 13814_737620-ch08.indd 13811/18/09 12:59 PM11/18/09 12:59 PM

  • Page 159

    Chapter 9Counting Your SalesIn This Chapter▶ Taking in cash▶ Discovering the ins and outs of selling on credit▶ Keeping track of money coming into your business▶ Staying on top of returns and allowances, as well as payments due▶ Dealing with bad debt▶ Recovering taxes from the governm...

  • Page 160

    140 Part III: Tracking Day-to-Day Business Operations with Your Booksmakes a deposit to the business’s chequing account the same day (sometimes within just seconds of the transaction, depending on the type of system the business sets up with the bank). The only type of payment that doesn’t fa...

  • Page 161

    141 Chapter 9: Counting Your SalesYou’ve probably never thought about how much bookkeeping information a sales receipt contains. Receipts offer a wealth of information that you can use for your business’s accounting system. A look at a receipt tells you the amount of cash collected, the type ...

  • Page 162

    142 Part III: Tracking Day-to-Day Business Operations with Your BooksRecording cash transactions in the books If you’re using a computerized accounting system, you can enter more detail about the day’s transactions, such as refunds from the day’s receipts, and track inventory sold, as well....

  • Page 163

    143 Chapter 9: Counting Your SalesSelling on CreditMany businesses decide to sell to customers on direct credit (commonly referred to as on account), meaning the business offers the credit, not a bank or credit card provider. This approach offers more flexibility in the type of terms that you can...

  • Page 164

    144 Part III: Tracking Day-to-Day Business Operations with Your Booksgive them more time to pay. If you loosen your qualification criteria and bill-paying requirements, you have to carefully monitor your customer accounts to be sure they’re not falling behind.The key risk you face is selling pr...

  • Page 165

    145 Chapter 9: Counting Your SalesIf you’re using QuickBooks, you enter purchases on account by using an invoice form like the one in Figure 9-2. Most of the information on the invoice form is similar to the sales receipt form (see the section “Collecting on Cash Sales,” earlier in this cha...

  • Page 166

    146 Part III: Tracking Day-to-Day Business Operations with Your Booksoutstanding invoices. You can easily generate statements for specific custom-ers or for all customers on the books. By the way, some people refer to these statements as monthly reminder statements. Figure 9-3: Generating stateme...

  • Page 167

    147 Chapter 9: Counting Your Sales Figure 9-4: In QuickBooks, recording collections from customers who buy on credit starts with the customer payment form. Proving Out the Cash RegisterTo ensure that cashiers don’t pocket a business’s cash, at the end of each day, cashiers must prove out (sho...

  • Page 168

    148 Part III: Tracking Day-to-Day Business Operations with Your Booksthe manager try to pinpoint the mistake. If they can’t find a mistake, they fill out a cash-overage or cash-shortage form. Some businesses charge the cashier directly for any shortages, but others fire the cashier after a cert...

  • Page 169

    149 Chapter 9: Counting Your SalesYou can track discount information very easily by using the data found on a standard sales register receipt. The receipt from a bakery shown in Table 9-3 includes sales discount details.Table 9-3 Cash Sales Receipt 4/25/2009ItemQuantityPriceTotalWhite Serving Set...

  • Page 170

    150 Part III: Tracking Day-to-Day Business Operations with Your Books If you use a computerized accounting system, add the sales discount as a line item on the sales receipt or invoice; the system automatically adjusts the sales figures and updates your Sales Discount account.Recording Sales Retu...

  • Page 171

    151 Chapter 9: Counting Your Sales You can set up whatever rules you want for returns. For internal control pur-poses, the key to returns is monitoring how your staff handles them. In most cases, you should require a manager’s approval on returns and allowances. Also, be sure your staff pays cl...

  • Page 172

    152 Part III: Tracking Day-to-Day Business Operations with Your Booksbusiness and how old each debt is. If you keep the books manually, you col-lect the necessary information from each customer account. If you keep the books in a computerized accounting system, you can generate this report automa...

  • Page 173

    153 Chapter 9: Counting Your Salesfor Doubtful Accounts. This account, which appears on the balance sheet along with the Accounts Receivable account, has two purposes: ✓ It reduces the book value of the Accounts Receivable down to a more realistic value for this asset. ✓ It keeps track of the...

  • Page 174

    154 Part III: Tracking Day-to-Day Business Operations with Your BooksHST charged on the transaction would simply add insult to injury. Everyone, the CRA included, agrees that fairness must prevail and that the CRA must share in your losses.Here’s how to recover that GST/HST tax. We use the same...

  • Page 175

    Chapter 10Employee Payroll and BenefitsIn This Chapter▶ Hiring employees▶ Withholding employee taxes and benefits▶ Figuring out each employee’s net pay▶ Preparing and recording payroll▶ Finding new ways to deal with payroll responsibilitiesUnless your business has only one worker (you...

  • Page 176

    156 Part III: Tracking Day-to-Day Business Operations with Your Books Remembering two critical numbersBefore you can start paying employees, your business needs to ensure that it has two vital numbers: ✓ Your payroll Business Number (BN): As we discuss in Chapter 1, if you have a payroll accoun...

  • Page 177

    157 Chapter 10: Employee Payroll and Benefits Figure 10-1: All employees should complete CRA Form TD1 when you hire them. 13. TOTAL CLAIM AMOUNT – Add lines 1 through 12.Your employer or payer will use this amount to determine the amount of your tax deductions.12. Amounts transferred from a de...

  • Page 178

    158 Part III: Tracking Day-to-Day Business Operations with Your Books On Page 2 of the TD1, the employee has the option to have additional taxes deducted from her pay cheque. Your employee may choose this option to force herself to save money that she will recoup when filing her annual tax return...

  • Page 179

    159 Chapter 10: Employee Payroll and BenefitsBesides hourly and salaried pays, you might also pay your employees on commission or for piecework. An example of piecework would be the plant-ing of tree seedlings. The tree planter gets paid for each seedling planted. The decision concerning pay peri...

  • Page 180

    160 Part III: Tracking Day-to-Day Business Operations with Your Books Most employees covered by the Employment Standards Act (ESA) — which include full-time, part-time, temporary, and seasonal employees, as well as contract workers and student workers — are eligible for an annual vacation wit...

  • Page 181

    161 Chapter 10: Employee Payroll and Benefitsdeadline date, usually by the 15th of the following month. For the province of Québec, you pay the Québec income tax and QPP to the Québec Minister of Revenue.You can calculate the CPP/QPP relatively easily. The government collects CPP/QPP only on i...

  • Page 182

    162 Part III: Tracking Day-to-Day Business Operations with Your Books Here’s an example of EI deductions in action. Stan (whom we talk about in the preceding section) earns a gross pay of $2,000 for a two-week period, which amounts to an annual rate of pay of $52,000 ($2,000 × 26 pay periods)...

  • Page 183

    163 Chapter 10: Employee Payroll and BenefitsBy looking at the federal and provincial income tax tables (located on the CRA Web site) for 2009, the bookkeeper determines the amount of the com-bined taxes is $280.20.In addition to CPP, EI, and combined income taxes, you may have to withhold some p...

  • Page 184

    164 Part III: Tracking Day-to-Day Business Operations with Your Books This net pay calculation doesn’t include any deductions for benefits. Many businesses offer their employees health, retirement, and other benefits — but those businesses expect the employees to share a portion of the costs...

  • Page 185

    165 Chapter 10: Employee Payroll and BenefitsSurveying Your Benefits OptionsBenefits include programs that you provide employees to better their lives, such as health insurance and retirement savings opportunities. Most benefits are tax-exempt, which means that the employee doesn’t have to pay ...

  • Page 186

    166 Part III: Tracking Day-to-Day Business Operations with Your Books Besides the RRSP or registered pension plan contributions, as an employer, you can offer a myriad of other tax-exempt benefits to employees, as well: ✓ Child care expenses: The government doesn’t tax child care if that chi...

  • Page 187

    167 Chapter 10: Employee Payroll and Benefits ✓ Recreational facilities: A recreational facility or club doesn’t give rise to a taxable benefit to employees if the business provides or pays an orga-nization to provide a recreational facility that’s available to all employees free of charge ...

  • Page 188

    168 Part III: Tracking Day-to-Day Business Operations with Your Books By far, the CRA considers the majority of employee benefits taxable. The most complicated calculations of taxable benefits concern an employee’s use of a business-owned or -leased vehicle. For the proper calculation of the st...

  • Page 189

    169 Chapter 10: Employee Payroll and BenefitsWith time records in hand, you have to calculate gross pay for each employee. For example, if an employee worked 45 hours and your business pays him $12 an hour, here’s how you calculate gross pay:40 regular hours × $12 per hour = $4805 overtime hou...

  • Page 190

    170 Part III: Tracking Day-to-Day Business Operations with Your Books For a salesperson who has a guaranteed base salary of $2,000, plus an addi-tional 5 percent commission on all products sold, you calculate pay by using this formula:Base salary + (Total amount sold × Commission percentage) = G...

  • Page 191

    171 Chapter 10: Employee Payroll and Benefitsto cover tips. Because the employer collects the tips, the CRA requires the employer to include these amounts in the employee’s wages. Consequently, the CRA considers the amounts an employer pays to employees from con-trolled tips as pensionable, ins...

  • Page 192

    172 Part III: Tracking Day-to-Day Business Operations with Your Books ✓ CPP/QPP Payable: Record the liability for the amount that you need to pay to the Receiver General for the Canada Pension Plan deductions or to the Québec Minister of Finance for the Québec Pension Plan. ✓ EI Payable: R...

  • Page 193

    173 Chapter 10: Employee Payroll and BenefitsOutsourcing Payroll and Benefits WorkBecause of all that you need to do to prepare payroll, your small business may want to outsource the work of payroll and benefits. We don’t disagree with a business making that choice. Many businesses outsource th...

  • Page 194

    174 Part III: Tracking Day-to-Day Business Operations with Your Books 16_737620-ch10.indd 17416_737620-ch10.indd 17411/18/09 12:59 PM11/18/09 12:59 PM

  • Page 195

    Chapter 11Employer-Paid Benefits and Government Payroll ReportingIn This Chapter▶ Calculating the employer’s share of CPP/QPP and EI contributions▶ Filing and paying withholding taxes and benefits▶ Figuring out workers’ compensation▶ Keeping accurate employee recordsYou may think that...

  • Page 196

    176 Part III: Tracking Day-to-Day Business Operations with Your Books Paying Employer Portions of CPP/QPP and EIAs we mention in Chapter 10, the employee and employer pay equally for CPP/QPP. You’re both on the hook to contribute 4.95 percent of the employee’s annual gross pay over $3,500, up...

  • Page 197

    177 Chapter 11: Employer-Paid Benefits and Government Payroll ReportingWhen the CRA makes any changes to the PD7A, based on the last remit-tance or assessment, an explanation follows on the body of the form, along with an area to enter the following information (which you also enter on the Remitt...

  • Page 198

    178 Part III: Tracking Day-to-Day Business Operations with Your Books The penalty is ✓ Three percent if the amount is one to three days late ✓ Five percent if the amount is four or five days late ✓ Seven percent if the amount is six or seven days late ✓ Ten percent if the amount is more t...

  • Page 199

    179 Chapter 11: Employer-Paid Benefits and Government Payroll Reportingthese links to obtain the registration forms and download employer classifi-cation manuals, premium rate tables, and handbooks or policy manuals that cover how to properly follow the government guidelines for your business.Mai...

  • Page 200

    180 Part III: Tracking Day-to-Day Business Operations with Your Books ✓ For gross pay: • Regular pay • Overtime pay • Total pay for the period • Cumulative year-to-date gross pay ✓ For deductions: • Income tax • CPP/QPP • EI • Union dues • Optional donations • Total deduc...

  • Page 201

    181 Chapter 11: Employer-Paid Benefits and Government Payroll Reporting Figure 11-1: You can add new employee personal and contact infor-mation to QuickBooks. Figure 11-2: QuickBooks can show you employee information about rate of pay and deductions. Completing a Record of Employment (ROE) for d...

  • Page 202

    182 Part III: Tracking Day-to-Day Business Operations with Your Books You need to prepare a ROE within five days of an interruption in earnings which occurs when an employee leaves because of pregnancy, injury, illness, adoption leave, a layoff, a leave without pay, or dismissal. The employee nee...

  • Page 203

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  • Page 204

    In this part . . .Eventually, every accounting period comes to an end, and whether it’s the end of a month, a quarter, or a year, you need to check your work and get ready to pre-pare reports for the period.This part introduces you to the part of the accounting cycle that involves summarizing a...

  • Page 205

    Chapter 12Depreciating Your AssetsIn This Chapter▶ Understanding depreciation and why you do it▶ Exploring depreciation methods▶ Looking at depreciation’s tax impact▶ Pulling together depreciation schedules▶ Entering depreciation expenses in the booksAll businesses use equipment, furn...

  • Page 206

    186 Part IV: Preparing the Books for Year’s (or Month’s) End of the asset to an expense that reduces your profit because of the use of that asset. You need to record a charge for depreciation expense on your income statement because this asset helped you earn revenue during the year. In this ...

  • Page 207

    187 Chapter 12: Depreciating Your AssetsLifespan isn’t the deciding factor for depreciation, however. You never depreciate some assets that last many years. One good example is land; you can always make use of land, so its carrying value never depreciates. You also can’t depreciate any proper...

  • Page 208

    188 Part IV: Preparing the Books for Year’s (or Month’s) End ✓ Shipping and delivery costs: Any shipping or delivery charges you paid to get the fixed asset. You should also include any delivery insurance you paid. ✓ Installation charges: Any charges you paid in order to have the equip-m...

  • Page 209

    189 Chapter 12: Depreciating Your Assetsbecause the more kilometres you drive the truck, the higher the depreciation expense. The odometer meter on the truck gives you a very easy way to keep track of how much you use the truck.You may have heard the term salvage value, which refers to a deprecia...

  • Page 210

    190 Part IV: Preparing the Books for Year’s (or Month’s) End You calculate the depreciation with the Double-Declining Balance method by using this formula:2 × (1 ÷ Estimated useful life) × Book value at the beginning of the year = Depreciation expenseSo, calculate our example truck’s dep...

  • Page 211

    191 Chapter 12: Depreciating Your AssetsUnits of Production or Units of ActivityThe Units of Production (UOP) method of depreciation works well when you want to record depreciation in proportion with how much you use the asset. The more you use the asset, the more depreciation expense you record....

  • Page 212

    192 Part IV: Preparing the Books for Year’s (or Month’s) End Select the convention that your business follows concerning how to prorate any amount of depreciation in the year that you purchase the asset. Most small businesses use the half-month convention because it best represents the amount...

  • Page 213

    193 Chapter 12: Depreciating Your Assetsthan other adjusting entries. We don’t give you lengthy instructions for how to use QuickBooks here because it depends on how your accountant initially set up the system. Figure 12-2: QuickBooks calculates the depre-ciation expense by using three of the f...

  • Page 214

    194 Part IV: Preparing the Books for Year’s (or Month’s) End Capital cost allowance (CCA)To understand how capital cost allowance (CCA) works, compare it to the Declining Balance method we explain in the section “Declining Balance,” ear-lier in this chapter. Two main differences exist bet...

  • Page 215

    195 Chapter 12: Depreciating Your AssetsAsk the opinion of the person in your business who actually uses the asset to find out how long he thinks the asset will remain useful. When you decide on the useful life of an asset, you also need to try to predict what the asset’s residual value is goin...

  • Page 216

    196 Part IV: Preparing the Books for Year’s (or Month’s) End Depreciation can be more than just a mathematical exercise. As the book-keeper, planning for any major cash outflows is a very important part of your job. Keeping track of depreciation is a good way to monitor the age of your asset...

  • Page 217

    Chapter 13Paying and Collecting InterestIn This Chapter▶ Understanding interest calculations▶ Making the most of interest income▶ Calculating loan interestFew businesses can make major purchases without taking out loans. Whether your business needs loans for vehicles, buildings, or other bu...

  • Page 218

    198 Part IV: Preparing the Books for Year’s (or Month’s) End The bank that has your money likely combines your money with that of other depositors and loans that money out to other people so that the bank can make more interest than it’s paying you. That’s why when you can get low interes...

  • Page 219

    199 Chapter 13: Paying and Collecting InterestTo show you how compound interest affects earnings, we calculated the three-year term deposit of $10,000 at 3 percent (0.03): ✓ Year One interest: $10,000 × 0.03 = $300.00 ✓ Year Two interest: ($10,000 + $300) × 0.03 = $309.00 ✓ Year Three int...

  • Page 220

    200 Part IV: Preparing the Books for Year’s (or Month’s) End Figure 13-1: In QuickBooks, you enter interest income at the beginning of the account recon-ciliation process. If you’re keeping the books manually, a journal entry to record interest would look similar to this:AccountDebitCredit...

  • Page 221

    201 Chapter 13: Paying and Collecting InterestShort-term debtAny money due in the next 12-month period is shown on the balance sheet as short-term or current debt. Any interest paid on that money is shown as an interest expense on the income statement.In most cases, you don’t have to calculate ...

  • Page 222

    202 Part IV: Preparing the Books for Year’s (or Month’s) End Using credit linesAs a small-business owner, you get better interest rates by using a line of credit with a bank rather than a credit card. Interest rates are usually lower on lines of credit. Typically, a business owner uses a cred...

  • Page 223

    203 Chapter 13: Paying and Collecting InterestIf you’re using a computerized system, you simply complete a cheque form and indicate which accounts are affected by the payment, and the system updates the accounts automatically. Figure 13-3 shows you how to record a loan payment in QuickBooks. Fi...

  • Page 224

    204 Part IV: Preparing the Books for Year’s (or Month’s) End As you can see in Figure 13-3, at the same time that you prepare the cheque for printing, you can add the accounts that are affected by that payment by splitting the detail expense information. We indicate that we should record $150...

  • Page 225

    205 Chapter 13: Paying and Collecting InterestYou split up long-term debt and show it in different line items. You put the portion of the debt principal that’s due in the next 12 months in the Current Liabilities section, which is usually a line item named something like Current Portion of Long...

  • Page 226

    206 Part IV: Preparing the Books for Year’s (or Month’s) End amounts coming out of your business’s bank account. Each payment includes both principal and interest, but you don’t get any breakdown detailing how much goes toward interest and how much goes toward principal.Separating princip...

  • Page 227

    207 Chapter 13: Paying and Collecting InterestReferring to the first payment line of our six-month amortization chart in Table 13-1 you have the information you’d need to record the first payment on the truck note:AccountDebitCreditNotes Payable – Vehicles$286.66Interest Expense$100.00 Cash$3...

  • Page 228

    208 Part IV: Preparing the Books for Year’s (or Month’s) End 20_737620-ch13.indd 20820_737620-ch13.indd 20811/18/09 12:59 PM11/18/09 12:59 PM

  • Page 229

    Chapter 14Proving Out the CashIn This Chapter▶ Counting your business’s cash▶ Finalizing the cash journals▶ Balancing out your bank accounts▶ Posting cash-related adjustmentsAll business owners — whether the business is a small, family-owned candy store or a major international conglo...

  • Page 230

    210 Part IV: Preparing the Books for Year’s (or Month’s) End With any accounting system, mistakes can be made, and unfortunately, any business can fall victim to incidents of theft or embezzlement. The only way to be sure that none of these problems exist in your business is to periodi-cally ...

  • Page 231

    211 Chapter 14: Proving Out the CashWe’re sure you’ve heard the well-worn expression, “Show me the money!” Well, in business, that idea is the core of your success. Everything relies on your cash profits, which you can take out of your business or use to expand your business.In Chapter 9,...

  • Page 232

    212 Part IV: Preparing the Books for Year’s (or Month’s) End Summarizing the Cash JournalsAs we explain in Chapter 5, if you keep the books manually, you can find a record of every transaction that involves cash in one of two Cash journals: the Cash Receipts journal (cash that comes into the ...

  • Page 233

    213 Chapter 14: Proving Out the Cash Figure 14-2: By using QuickBooks, you can produce reports that show your business’s purchases by vendor or by items bought. Finalizing cash receiptsIf all your books are up-to-date, when you summarize the Cash Receipts journal on whatever day and time you ch...

  • Page 234

    214 Part IV: Preparing the Books for Year’s (or Month’s) End you record as cash receipts to reflect those costs of doing business. Monthly credit-card fees vary greatly, depending on the bank you’re using, but here are some of the most common fees that a bank may charge your business: ✓ A...

  • Page 235

    215 Chapter 14: Proving Out the Cash ✓ Transaction fee: A standard fee charged to your business for each credit-card and debit-card transaction that you submit for authorization. You pay this fee even if the cardholder is denied and you lose the sale. ✓ Equipment and software fees: Charged to...

  • Page 236

    216 Part IV: Preparing the Books for Year’s (or Month’s) End You also record any fees related to credit-card sales in the Cash Disbursements journal. For example, if credit-card fees for the month of June total $200, the entry in the books should look like this:AccountDebitCreditCredit-Card F...

  • Page 237

    217 Chapter 14: Proving Out the CashFinalizing cash outlaysAfter you summarize the Cash Receipts journal (as discussed in the preced-ing section), you next need to summarize the Cash Disbursements journal. Add any adjustments related to outgoing cash receipts, such as bank credit-card fees, to th...

  • Page 238

    218 Part IV: Preparing the Books for Year’s (or Month’s) End When proving out the cash, you should also review any accounts in which you’ve accrued expenses for later payment, such as expenses related to pay-roll benefits, so that you can be sure you have all accrual accounts up-to-date. T...

  • Page 239

    219 Chapter 14: Proving Out the Cashon all your subsequent bank reconciliations and continue to cause a difference between the amount of cash in your bank account and the amount of cash in your General Ledger. Until corrected, the reconciling item for the error will come back to haunt you the nex...

  • Page 240

    220 Part IV: Preparing the Books for Year’s (or Month’s) End ✓ If the bank balance is lower than your balance: Check that your Cash account lists all cheques listed by the bank. Also, check that the amounts of all cheques correspond between your Cash account and the bank’s statement to e...

  • Page 241

    221 Chapter 14: Proving Out the Cash Here’s another trick to detect errors, which you can use if you accidentally transpose numbers or record an amount with missing or extra zeros (called slides). When you make this kind of error, you can exactly divide the amount of the difference between the ...

  • Page 242

    222 Part IV: Preparing the Books for Year’s (or Month’s) End After you click Continue, a screen appears that lists all cheques your busi-ness has written since the last reconciliation, as well as all deposits and transfers. Put a check mark next to the cheques, deposits, and transfers that ha...

  • Page 243

    223 Chapter 14: Proving Out the Cash Figure 14-5: After recon-ciling your accounts, QuickBooks auto-matically provides a recon-ciliation summary. Posting Adjustments and CorrectionsAfter you summarize the Cash Receipts and Cash Disbursements journals (which we talk about in the section “Summari...

  • Page 244

    224 Part IV: Preparing the Books for Year’s (or Month’s) End 21_737620-ch14.indd 22421_737620-ch14.indd 22411/18/09 1:01 PM11/18/09 1:01 PM

  • Page 245

    Chapter 15Finalizing the JournalsIn This Chapter▶ Making sure your journals are correct▶ Gathering journal information for posting▶ Posting adjustments to the General Ledger▶ Examining your journals in a computerized systemAs the old saying goes, “The devil is in the details.” When it...

  • Page 246

    226 Part IV: Preparing the Books for Year’s (or Month’s) End Even the smallest error in a journal can cause a lot of frustration when you try to run a trial balance, so do a thorough search for errors while you post each journal for the month. You can much more easily find an error at this p...

  • Page 247

    227 Chapter 15: Finalizing the Journalsis open during the month. When you summarize the Accounts Receivable account in the General Ledger, you arrive at a closing balance. This total cor-responds to the sum of all the accounts outstanding from your customers as of that date. The entries posted in...

  • Page 248

    228 Part IV: Preparing the Books for Year’s (or Month’s) End Each transaction in the General Ledger should have a reference number next to it, which tells you where the detail for that transaction first appears in the journals. You may need to review this information later when you’re prov...

  • Page 249

    229 Chapter 15: Finalizing the Journals ✓ Recording a sales transaction in the Sales journal without recording the details of that transaction in the customer’s account. ✓ Recording a sales transaction directly into the customer’s account with-out recording it in the Sales journal. If you...

  • Page 250

    230 Part IV: Preparing the Books for Year’s (or Month’s) End The total of outstanding bills on the Accounts Payable Aging Summary should match the total shown on the Accounts Payable control account in the General Ledger as of the end of the accounting period. If yours match, you’re ready t...

  • Page 251

    231 Chapter 15: Finalizing the Journals While you post and reconcile the books each month, you get an idea of the numbers that you can expect for each type of journal. After a while, you can pick out problems just by scanning a page — no detailed research required!Planning for cash flowThe proc...

  • Page 252

    232 Part IV: Preparing the Books for Year’s (or Month’s) End only record was a note in the customer’s account, both the Sales account and the Accounts Receivable account are affected by the mistake, and the cor-recting entry looks like this:AccountDebitCreditAccounts Receivable$100 Sales$10...

  • Page 253

    233 Chapter 15: Finalizing the JournalsFor example, in QuickBooks, go to the Navigator List, click Report and under Report Finder click Vendors & Payables in the Select a type of report drop-down list. As shown in Figure 15-2, several possible report formats appear, even in graph form, to ill...

  • Page 254

    234 Part IV: Preparing the Books for Year’s (or Month’s) End Figure 15-3: When you run an Accounts Payable Aging Detail report in QuickBooks, you get a listing of all outstanding bills, the dates the bills were received, and the dates they’re due. In addition to locating your bill-paying p...

  • Page 255

    235 Chapter 15: Finalizing the Journalssystem. Someone may have entered a customer’s purchase into the com-puter in error, and you could end up sending the bill to the wrong person. Some businesses double-check their Accounts Receivable bookkeeping for accuracy by sending surveys to customers p...

  • Page 256

    236 Part IV: Preparing the Books for Year’s (or Month’s) End Figure 15-5: A com-puterized accounting system keeps a journal of all trans-actions, which you can review during the summariz-ing and reconciling process. 22_737620-ch15.indd 23622_737620-ch15.indd 23611/18/09 1:00 PM11/18/09...

  • Page 257

    Chapter 16Checking Your Accuracy — By Trial and Hopefully No ErrorIn This Chapter▶ Putting your balances on trial▶ Finding and correcting errors▶ Preparing a worksheet▶ Generating reports from your computerized systemAfter you summarize and post all your journals and do your darnedest t...

  • Page 258

    238 Part IV: Preparing the Books for Year’s (or Month’s) End The first step toward useable reports that help you interpret your financial results is doing a trial balance. Basically, a trial balance is a worksheet pre-pared manually or spit out by your computer accounting system that lists al...

  • Page 259

    239 Chapter 16: Checking Your Accuracy — By Trial and Hopefully No ErrorFigure 16-1 shows a sample trial balance for a business as of May 31, 2009. The debit column and the credit column both equal $57,850, making this a successful trial balance. Figure 16-1: A sample trial balance. 23_737620-c...

  • Page 260

    240 Part IV: Preparing the Books for Year’s (or Month’s) End A successful trial balance doesn’t guarantee that your books are totally free of errors; it just means that you’ve entered all your transactions in balance. You still may have errors in the books related to how you entered your...

  • Page 261

    241 Chapter 16: Checking Your Accuracy — By Trial and Hopefully No Errorsure you didn’t make an error when transcribing the account balances to the trial balance. You can correct this type of problem pretty quickly and easily. Simply correct the incorrect balances and add up the trial balance...

  • Page 262

    242 Part IV: Preparing the Books for Year’s (or Month’s) End won’t be successful is pretty slim. But that doesn’t mean your accounts are guaranteed error-free.Remember the saying “Garbage in, garbage out”? If you make a mistake when you enter transaction data into the system, even if ...

  • Page 263

    243 Chapter 16: Checking Your Accuracy — By Trial and Hopefully No Error Figure 16-3: A sample trial balance report produced by QuickBooks. Developing a Financial Statement WorksheetAfter your accounts successfully pass a trial balance test (see the section “Building your trial balance,” ea...

  • Page 264

    244 Part IV: Preparing the Books for Year’s (or Month’s) End In Figure 16-4, you can see a sample of a worksheet developed from trial bal-ance numbers. The bookkeeper has transferred the numbers of the trial bal-ance to the appropriate financial statement; for example, the Cash account (which...

  • Page 265

    245 Chapter 16: Checking Your Accuracy — By Trial and Hopefully No ErrorIn Figure 16-4, the $4,500 difference for the balance sheet appears as a credit, representing an increase in equity. The Equity account reflects the profits that owner has reinvested into the business’s assets in order to...

  • Page 266

    246 Part IV: Preparing the Books for Year’s (or Month’s) End ✓ Income & Expenses: Some key reports in this section include • Income by customer (both a summary and a detailed report) • Expenses by vendor (both a summary and a detailed report) ✓ Balance Sheet: Some key reports in ...

  • Page 267

    247 Chapter 16: Checking Your Accuracy — By Trial and Hopefully No ErrorYou can also take the time to custom-design reports that meet your busi-ness’s unique financial information needs. Many businesses customize reports to collect information by department or division. You’re only limited ...

  • Page 268

    248 Part IV: Preparing the Books for Year’s (or Month’s) End 23_737620-ch16.indd 24823_737620-ch16.indd 24811/18/09 1:01 PM11/18/09 1:01 PM

  • Page 269

    Chapter 17Adjusting the BooksIn This Chapter▶ Making adjustments for non-cash transactions▶ Taking your adjustments for a trial (balance) run▶ Adding accounts to and deactivating accounts on the Chart of AccountsDuring an accounting period, your bookkeeping duties focus on your business’s...

  • Page 270

    250 Part IV: Preparing the Books for Year’s (or Month’s) End ✓ Asset depreciation: To recognize the use of assets during the account-ing period. ✓ Prepaid expenses: To match a portion of expenses that your business paid at one point during the year, but from which your business used bene...

  • Page 271

    251 Chapter 17: Adjusting the Booksfinancial health of the business, he takes that future obligation into consid-eration before making a decision to loan money to or possibly invest in the business.Often, you calculate depreciation for accounting purposes by using the straight-line depreciation m...

  • Page 272

    252 Part IV: Preparing the Books for Year’s (or Month’s) End Allocating prepaid expensesMost businesses have to pay certain expenses at the beginning of the year, even though they benefit from that expense throughout the year. Insurance is a prime example of this type of expense. Most insuran...

  • Page 273

    253 Chapter 17: Adjusting the Booksrecords those purchases in a Purchases account without indicating any change to inventory. When the business sells the products, you record the sales in the Sales account but don’t make any adjustment to the value of the inventory. Instead, you adjust the Inve...

  • Page 274

    254 Part IV: Preparing the Books for Year’s (or Month’s) End Allowing for bad debtsNo business likes to accept the fact that it’ll never see the money owed by some of its customers, but in reality, that happens to most businesses that sell items on account. When your business determines tha...

  • Page 275

    255 Chapter 17: Adjusting the Books ✓ By percentage of total accounts receivable: Other businesses look at their bad-debts histories and develop percentages that reflect those experiences. Instead of taking the time to identify each specific account that will probably be a bad debt, these busin...

  • Page 276

    256 Part IV: Preparing the Books for Year’s (or Month’s) End Recognizing unpaid salaries and wagesNot all pay periods fall at the end of a month. If you pay your employees every two weeks, you may end up closing the books at the end of a month or year in the middle of a pay period. So, for ex...

  • Page 277

    257 Chapter 17: Adjusting the Bookswould look very good because you didn’t fully reflect your salary and wage expenses in the income statement, but your April income statement would look very bad because it would include the extra expenses that your business actually incurred in March.Accruing ...

  • Page 278

    258 Part IV: Preparing the Books for Year’s (or Month’s) End The key difference in the worksheet for the adjusted trial balance, as com-pared to the manual worksheet we discuss in Chapter 16, is that you must add four additional columns to the worksheet, for a total of 11 columns: ✓ Column ...

  • Page 279

    259 Chapter 17: Adjusting the BooksYou can add accounts to your Chart of Accounts throughout the year, but if you decide to add an account in the middle of the year in order to more closely track certain assets, liabilities, revenues, or expenses, you may need to adjust some related entries. Supp...

  • Page 280

    260 Part IV: Preparing the Books for Year’s (or Month’s) End Using QuickBooks’ General JournalWhen you record adjusting entries at the end of any reporting period, none of those entries involve cash. If you use QuickBooks, you enter these trans-actions in the General Journal. (You also use ...

  • Page 281

    261 Chapter 17: Adjusting the Books Figure 17-2: A General Journal entry that records the depreciation expense on a vehicle. 24_737620-ch17.indd 26124_737620-ch17.indd 26111/18/09 1:00 PM11/18/09 1:00 PM

  • Page 282

    262 Part IV: Preparing the Books for Year’s (or Month’s) End 24_737620-ch17.indd 26224_737620-ch17.indd 26211/18/09 1:00 PM11/18/09 1:00 PM

  • Page 283

    Part VReporting Results and Starting Over25_737620-pp05.indd 26325_737620-pp05.indd 26311/18/09 12:58 PM11/18/09 12:58 PM

  • Page 284

    In this part . . .It’s time to show off all the hard work that you and your employees have put into keeping your business operat-ing and making a profit. This part explains how to use all the information that you’ve collected throughout the accounting period to prepare financial reports that ...

  • Page 285

    Chapter 18Developing a Balance SheetIn This Chapter▶ Breaking down the balance sheet▶ Pulling together your balance sheet accounts▶ Choosing a balance sheet format▶ Drawing conclusions from your balance sheet▶ Polishing electronically produced balance sheetsPeriodically, you want to kno...

  • Page 286

    266 Part V: Reporting Results and Starting Over Although a balance sheet doesn’t tell the whole story about a business, it gives the outside readers some idea of the business’s financial position and how it’s financed at a particular point in time. For example, a bank needs to decide wheth...

  • Page 287

    267 Chapter 18: Developing a Balance SheetTable 18-1 Balance Sheet AccountsAccount NameBalance in AccountCash$2,500Petty Cash$500Accounts Receivable$1,000Inventory$1,200Equipment$5,050Vehicles$25,000Furniture$5,600Accounts Payable$2,200Loans Payable$29,150Capital$5,000Dividing and listing your as...

  • Page 288

    268 Part V: Reporting Results and Starting Over Current assetsCurrent assets are things your business owns that you can easily convert to cash and that you expect to use in the next 12 months to pay your bills and your employees. Current assets include cash, accounts receivable (money due from cu...

  • Page 289

    269 Chapter 18: Developing a Balance SheetSimilarly, if your business owns one or more buildings, you should have a line item labelled Land and another labelled Buildings. And if you lease equip-ment under certain conditions that resemble a purchase, you classify that equipment as Equipment under...

  • Page 290

    270 Part V: Reporting Results and Starting Over In order to show in financial statements that the book values of non-current assets reduce over time, you either depreciate or amortize them. You depreciate tangible assets in the category of Property, Plant, and Equipment, with the exception of la...

  • Page 291

    271 Chapter 18: Developing a Balance Sheet Most businesses try to minimize their current liabilities that carry interest charges because the interest rates on short-term loans, such as credit cards, are usually much higher than those on loans that have long terms. While you manage your business...

  • Page 292

    272 Part V: Reporting Results and Starting Over Because H.G.’s Cheesecake Shop is a sole proprietorship, a single account appears in the Equity section of its balance sheet:Capital $9,500The trial balance in the worksheet for H.G.’s Cheesecake Shop has a bal-ance of $5,000. This amount repres...

  • Page 293

    273 Chapter 18: Developing a Balance SheetCanada now use a third option, the Statement of Financial Position format (as do corporations in Europe, Australia, and elsewhere in the world) because of the implementation of the International Financial Reporting Standards (IFRS).Account formatThe Accou...

  • Page 294

    274 Part V: Reporting Results and Starting Over H.G.’s Cheesecake ShopBalance SheetMay 31, 2009Current AssetsCash$3,000Accounts receivable1,000Inventory1,200 Total current assets$5,200Non-Current AssetsEquipment5,050Furniture5,600Vehicles25,000 Total non-current assets$35,650 Total assets$40,85...

  • Page 295

    275 Chapter 18: Developing a Balance SheetHere’s the statement of financial position of H.G.’s Cheesecake Shop on May 31, 2009:H.G.’s Cheesecake ShopStatement of Financial PositionAs of May 31, 2009AssetsNon-Current AssetsEquipment$5,050Furniture5,600Vehicles25,000 Total non-current assets$...

  • Page 296

    276 Part V: Reporting Results and Starting Over whether to loan money to or invest in your business, run these tests yourself before you seek loans or investors. Ultimately, the ratio tests we cover in the following sections can help you determine whether your business is in a strong cash positio...

  • Page 297

    277 Chapter 18: Developing a Balance Sheet Many lenders prefer the acid test ratio when determining whether to give you a loan because of this ratio’s strictness.Follow these steps to calculate your business’s acid test ratio: 1. Determine your quick assets. Cash + Accounts receivable + Trad...

  • Page 298

    278 Part V: Reporting Results and Starting Over Lenders like to see a debt to equity ratio close to 1.0 because it indicates that the amount of debt is equal to the amount of equity. Because H.G.’s Cheesecake Shop has a debt to equity ratio of 3.3, most banks probably wouldn’t loan it any mon...

  • Page 299

    Chapter 19Producing an Income StatementIn This Chapter▶ Sorting out the elements of an income statement▶ Preparing the statement▶ Analyzing statement data▶ Zeroing in on profitability▶ Digging into the income statement detailsWithout one very important financial report tool, you’d nev...

  • Page 300

    280 Part V: Reporting Results and Starting Over the current year and the two previous years. Providing this much information gives income statement readers a view of the business’s earning trends.Organizing the accounts from your trial balance (refer to Chapter 16) and plac-ing them into groups...

  • Page 301

    281 Chapter 19: Producing an Income Statement ✓ Profit or Loss: Whether the business made a profit or loss during the accounting period in review; calculated by subtracting total expenses from gross profit and adding any other income.Formatting the Income StatementBefore you actually create you...

  • Page 302

    282 Part V: Reporting Results and Starting Over Using the same numbers, here’s a basic income statement prepared in the multi-step format:Revenues Net sales$1,000 Cost of goods sold500Gross profit$500Operating expenses Depreciation50 Advertising50 Salaries100 Supplies100Total operating expenses...

  • Page 303

    283 Chapter 19: Producing an Income StatementFinding cost of goods soldCost of goods sold is the total amount your business spent to buy or make the goods or services that you sold. To calculate this amount for a business that buys its finished products from another business in order to sell them...

  • Page 304

    284 Part V: Reporting Results and Starting Over Table 19-1 Monthly Income Statement for May 2009, H.G.’s Cheesecake ShopMonths EndedMayAprilMarchRevenues Net sales $19,000 Cost of goods sold 6,500Gross profit12,500Operating expenses Advertising expense1,500 Bank service charges120 Credit card ...

  • Page 305

    285 Chapter 19: Producing an Income StatementGauging your cost of goods soldBusinesses that make their own products, rather than buy them for future sale, must track inventory at three different levels: ✓ Raw Materials: This line item includes purchases of all items used to make your business...

  • Page 306

    286 Part V: Reporting Results and Starting Over In addition to sales revenue, cost of goods sold can also be a big factor in a downward profit trend. For example, if the amount you spend to purchase products that you then sell goes up, your gross profit goes down. As a busi-ness owner, you need ...

  • Page 307

    287 Chapter 19: Producing an Income StatementTable 19-2 Monthly Income Statement for May 2009 with Percentage of Net Sales — H.G.’s Cheesecake ShopMonth EndedMayRevenues Net sales$19,000100.0% Cost of goods sold6,50034.2%Gross profit12,50065.8%Operating expenses Advertising expense1,5007.9% ...

  • Page 308

    288 Part V: Reporting Results and Starting Over You may want to see how your income statement results compare to indus-try trends for similar businesses that have similar revenues; this process is called benchmarking. By comparing results, you can find out whether your costs and expenses are reas...

  • Page 309

    289 Chapter 19: Producing an Income StatementThree common tests are Return on Sales (ROS), Return on Assets (ROA), and Return on Equity (ROE). These ratios have much more meaning if you can find industry averages for your particular type of business so that you can compare your results. When you...

  • Page 310

    290 Part V: Reporting Results and Starting Over As you can see from this calculation, H.G.’s Cheesecake Shop made 23.7 percent on each dollar of sales. To determine whether the ROS that you cal-culate for your business calls for celebration, you need to find the ROS ratios for similar businesse...

  • Page 311

    291 Chapter 19: Producing an Income StatementYou calculate ROE by dividing profit by shareholders’ or owners’ equity. H.G.’s Cheesecake Shop’s equity (in the amount of $9,500) appears on its balance sheet, which you can see in Chapter 18. The following shows H.G.’s Cheesecake Shop’s c...

  • Page 312

    292 Part V: Reporting Results and Starting Over ✓ Returns: Transactions in which items are returned by the buyer for any reason — not the right size, damaged, defective, and so on. If a busi-ness’s number of returns increases dramatically, a larger problem may be the cause; therefore, busi...

  • Page 313

    293 Chapter 19: Producing an Income Statement Figure 19-1: Set up budgets with QuickBooks, including profit and loss by account. 27_737620-ch19.indd 29327_737620-ch19.indd 29311/18/09 1:06 PM11/18/09 1:06 PM

  • Page 314

    294 Part V: Reporting Results and Starting Over 27_737620-ch19.indd 29427_737620-ch19.indd 29411/18/09 1:06 PM11/18/09 1:06 PM

  • Page 315

    Chapter 20Completing Year-End Payroll and ReportsIn This Chapter▶ Mastering employee payroll reporting▶ Balancing and reconciling annual payroll summariesEven though you diligently file all your monthly or quarterly remittance vouchers with the federal government throughout the year, you stil...

  • Page 316

    296 Part V: Reporting Results and Starting Over Preparing T4sYou should keep most of the information that you need to put together an employee’s T4 as part of your payroll records so that you can easily pull it together.For each employee, you must complete four copies of a T4: two copies go to ...

  • Page 317

    297 Chapter 20: Completing Year-End Payroll and Reports Figure 20-1: The CRA form T4 — State ment of Remu-neration Paid. 222426444650565512Exempt – ExemptionBusiness NumberNuméro d'entrepriseEI insurable earningsGains assurables d'AESocial insurance numberNuméro d'assurance socialeEmployer'...

  • Page 318

    298 Part V: Reporting Results and Starting Over ✓ Box 18 – Employee’s EI premiums: Enter the amount of Employment Insurance (EI) premiums that you deducted from the employee’s gross pay. Don’t include the employer’s share of the contributions. Like with CPP (or QPP), if you over-dedu...

  • Page 319

    299 Chapter 20: Completing Year-End Payroll and Reports ✓ Box 55 – Employee’s PPIP insurable earnings: For employees who work in Québec, enter the total amount that you used to calculate the employee’s PPIP premiums. ✓ Other information: The Other Information area at the bottom of the ...

  • Page 320

    300 Part V: Reporting Results and Starting Over The filing deadline with the CRA for the T4s and the T4 Summary is the last day of February following the calendar year to which the information return applies. If you fail to file these forms by the deadline, you have to pay a pen-alty for each fa...

  • Page 321

    301 Chapter 20: Completing Year-End Payroll and Reports All contributions that the employer and employee made have to match the total amount of the monthly (possibly quarterly) remittances that you sent in to the CRA by using the PD7A Remittance Voucher (which we discuss in Chapter 11). Figure 20...

  • Page 322

    302 Part V: Reporting Results and Starting Over Before preparing the T4 Summary, total up the data and make sure that the sums of Boxes 16, 17, 18, 19, and 22 correspond to the year-to-date total of the remittances. You enter the remitted amount in Box 82 of the T4 Summary. If the entries in Boxe...

  • Page 323

    Chapter 21Satisfying the Tax ManIn This Chapter▶ Sorting out business structures▶ Filing sole proprietor taxes▶ Reporting taxes on partnerships▶ Filing taxes for corporations▶ Reporting and paying retail sales taxes and GST/HSTPaying taxes and reporting income for your business are very...

  • Page 324

    304 Part V: Reporting Results and Starting Over Sole proprietorshipThe simplest legal structure for a business is the sole proprietorship, a busi-ness that’s owned by one individual. An individual can be the sole proprietor of several businesses. As far the Canada Revenue Agency (CRA) is concer...

  • Page 325

    305 Chapter 21: Satisfying the Tax ManLimited partnership (LP)Partners in a partnership don’t always have to share equal risks. A partner-ship may have two different types of partners: general and limited. The gen-eral partner runs the day-to-day business and is held personally responsible for ...

  • Page 326

    306 Part V: Reporting Results and Starting Over (TSX), in order to be a corporation, though. In fact, most corporations are pri-vate entities that sell their stock privately among friends, family, and investors.If you’re a small-business owner who wants to incorporate, you first must form a boa...

  • Page 327

    307 Chapter 21: Satisfying the Tax ManBusinesses that incorporate have relatively high start-up costs. Some of these costs are directly related to the process of setting up the corporation, which involves legal services. Although you don’t have to obtain legal advice when you incorporate, we en...

  • Page 328

    308 Part V: Reporting Results and Starting Over the amounts taper off in subsequent years. The amounts that you can claim supposedly work out to the same total amounts that you record as depre-ciation in your books. The bias in the timing of the additional tax deduction gives you a postponement o...

  • Page 329

    309 Chapter 21: Satisfying the Tax Man Keep close track of the tax instalment deadlines: March, June, September, and December 15. Make sure that you have enough money in your personal bank account to make these payments on time.Filing Tax Forms for PartnershipsIf your business is structured as a ...

  • Page 330

    310 Part V: Reporting Results and Starting Over are more complex than personal income tax returns, and each province has unique tax requirements and practices. The federal corporate tax return is called a T2 Corporate Income Tax Return.We don’t go into a lot of detail about the complex calculat...

  • Page 331

    311 Chapter 21: Satisfying the Tax ManWhen you become a GST/HST registrant with the CRA, the CRA gives you a reporting period (monthly or quarterly, for example) and sends you a per-sonalized pre-printed Goods and Services Tax/Harmonized Sales Tax Return, Form GST34. This form already has your na...

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  • Page 333

    Chapter 22Prepping the Books for a New Accounting CycleIn This Chapter▶ Wrapping up General Ledger accounts▶ Looking back through customer accounts▶ Checking for unpaid vendor bills▶ Clearing out unnecessary accounts▶ Transitioning into a new accounting cycleIn bookkeeping, an accountin...

  • Page 334

    314 Part V: Reporting Results and Starting Over Finalizing the General LedgerAfter you complete your accounting work for the accounting cycle in which your business operates, you need to re-examine your General Ledger. You must zero out some accounts in the General Ledger so that they start the n...

  • Page 335

    315 Chapter 22: Prepping the Books for a New Accounting Cyclesnapshot of the financial state of your business as of a particular date. From one accounting cycle to the next, your assets and (unfortunately) liabilities remain, and you also need to maintain the information about how much equity you...

  • Page 336

    316 Part V: Reporting Results and Starting Over QuickBooks provides a Year-End Guide Checklist (see Figure 22-3) to help you keep track of all the year-end activities that you need to do. The checklist also includes links to Help screens that explain how to do all the year-end closing tasks. You ...

  • Page 337

    317 Chapter 22: Prepping the Books for a New Accounting CycleChecking customer accountsWhile you prepare your books for the end of an accounting cycle, review your customer accounts. When you start a new accounting cycle, you cer-tainly want to carry over any balance still due from customers. Bef...

  • Page 338

    318 Part V: Reporting Results and Starting Over If you use a computerized accounting system, deleting an account deletes all past transactions in that account, as well. Consequently, you lose all the his-torical information necessary to make comparisons on financial reports. The only time you sh...

  • Page 339

    319 Chapter 22: Prepping the Books for a New Accounting Cycle You don’t need to worry about a hard and fast rule for file storage. You may find that you need to access some files regularly and therefore don’t want to put them in storage. No problem. Pull out any files related to ongoing activ...

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    320 Part V: Reporting Results and Starting Over 30_737620-ch22.indd 32030_737620-ch22.indd 32011/18/09 1:06 PM11/18/09 1:06 PM

  • Page 341

    Part VIThe Part of Tens31_737620-pp06.indd 32131_737620-pp06.indd 32111/18/09 1:05 PM11/18/09 1:05 PM

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    In this part . . .We join the For Dummies series tradition by providing you with some lists of tens. In this case, the lists contain key factors that can help you maintain your books and use the information collected. We give you the ten best ways to use your books to manage your business’s cas...

  • Page 343

    Chapter 23Top Ten Ways to Manage Your Business Cash with Your BooksIn This Chapter▶ Keeping a handle on internal bookkeeping tools▶ Monitoring profits and expenses▶ Dealing smartly with vendors, contractors, and customersMany business owners think of bookkeeping as a necessary evil, but in ...

  • Page 344

    324 Part VI: The Part of Tens Balancing and Posting Your EntriesYou can figure out how your business is doing only by balancing the books. Without balanced books, you can never know whether your profit numbers are accurate. In bookkeeping, you use a process called double-entry bookkeep-ing to kee...

  • Page 345

    325 Chapter 23: Top Ten Ways to Manage Your Business Cash with Your BooksPaying Bills Accurately and on TimeIf you want to continue getting supplies, products, and services from your vendors and contractors, you must pay them accurately and on time. Managing your payments through the Accounts Pay...

  • Page 346

    326 Part VI: The Part of Tens Comparing Sales Goals to Actual SalesIn addition to watching your expenses, you also need to monitor your actual sales so that they match the sales goals you set at the beginning of the year. Designing an internal report that tracks sales goals versus actual sales al...

  • Page 347

    Chapter 24Top Ten Most Important Accounts for Any BookkeeperIn This Chapter▶ Thinking about key Asset accounts▶ Understanding critical Liability accounts▶ Taking in money▶ Monitoring costs and expenses▶ Tracking the owners’ shareEach and every account has its purpose in bookkeeping, b...

  • Page 348

    328 Part VI: The Part of Tens Accounts ReceivableIf your business sells its products or services to customers on account, you definitely need an Accounts Receivable account. In this account, you track all money due from customers. As the bookkeeper, you need to keep Accounts Receivable up to date...

  • Page 349

    329 Chapter 24: Top Ten Most Important Accounts for Any Bookkeeperlaws require that you deduct from an employee’s gross pay a combined federal and provincial withholding tax. These laws also require that both the employer and the employee make contributions to the Canada Pension Plan (CPP) and/...

  • Page 350

    330 Part VI: The Part of Tens Wages and Salaries ExpenseIt’s a fact of business that you must pay employees to get them to stay around. No matter how much you beg, few people want to work for nothing. To keep up with what is, for many businesses, the biggest expense, you track all money paid to...

  • Page 351

    Glossaryaccounting period: The time period over which the books track financial information.accounts payable: Money due to vendors, suppliers, contractors, and consultants for products or services purchased by the business.accounts receivable: Revenue not yet received on products sold or services...

  • Page 352

    332 Bookkeeping For Canadians For Dummies arm’s length transaction: An exchange of assets, products, or services between two unrelated or unaffiliated parties or, if the parties are related, conducted as if the parties were unrelated to avoid the appearance of conflict of interest.assets: All t...

  • Page 353

    333 Glossarycertified general accountant (CGA): A CGA belongs to the Certified General Accountants Association of Canada. CGAs work within organizations, provid-ing their expertise in varying roles besides accounting.certified management accountant (CMA): A CMA belongs to The Society of Managemen...

  • Page 354

    334 Bookkeeping For Canadians For Dummies current ratio: A test of a business’s short-term liquidity (debt-paying capa-bility). A business calculates the current ratio by dividing its total current assets by its total current liabilities.debits: Accounting entries that increase Asset, Expense, ...

  • Page 355

    335 GlossaryFirst In, First Out (FIFO): An accounting cost formula used to assign cost to inventory. This formula assumes the first items available for sale are the first items sold.fiscal year: An accounting period, generally 12 months long. Ends on December 31 for unincorporated businesses and ...

  • Page 356

    336 Bookkeeping For Canadians For Dummies inventory: All products that the business manufactured or purchased, which it plans to sell to customers.journals: Where bookkeepers keep records (in chronological order) of daily business transactions.Land: The account that tracks the land owned, control...

  • Page 357

    337 Glossaryon account: On credit. A bookkeeper records purchases and sales on account with the understanding and agreement that the business will make cash collections and payments at a later date.operating cash flow: The cash generated by a business’s operations to produce and sell its produc...

  • Page 358

    338 Bookkeeping For Canadians For Dummies posting: The process of entering summarized transactions to the General Ledger that first appeared in a journal in chronological order.prepaid expenses: Expenses that a business pays up front, such as a year’s worth of insurance or property taxes.profit...

  • Page 359

    339 Glossaryspecific identification: An accounting cost formula used to keep track of the cost inventory based on the actual items sold and their individual costs.statement of cash flows: One of the three primary financial statements of a business, which summarizes its cash inflows and outflows d...

  • Page 360

    340 Bookkeeping For Canadians For Dummies 34_737620-bapp01.indd 34034_737620-bapp01.indd 34011/18/09 1:05 PM11/18/09 1:05 PM

  • Page 361

    IndexNumbersGST34 Goods and Services Tax/Harmonized Sales Tax Return Form, 311PD7A Statement of Account for Current Source Deductions form, 176–177TD1 Personal Tax Credits Return form, 156–158T2 Corporate Income Tax Return form, 310T4 Form (Statement of Remuneration Paid), 296–302T4 slip, 1...

  • Page 362

    342 Bookkeeping For Canadians For Dummies accounts payableaccruing unpaid bills, 217aging summary reports, 229–230, 231, 233, 234cheque-signing procedures, 136described, 28, 44, 331managing, 136–137posting bill payments, 217posting entries to, 65–66QuickBooks example, 71Accounts Payable acc...

  • Page 363

    343343 IndexArchive & Condense Data Wizard (QuickBooks), 316arm’s length transaction, 332assets. See also book value; fi xed assets; non-current assetsbalance sheet, 67, 266, 267–270control costs, 120–121cost basis of, 187–188current, 38, 40–41, 268, 333defi ned, 10, 27, 39, 332depr...

  • Page 364

    344 Bookkeeping For Canadians For Dummies bookkeepers, 1, 9, 25–26bookkeeping. See also accounting methods; manual bookkeepingaccuracy testing, 15–16assets, liabilities, and equity, 10–11business number (BN), 18–24common terms used in, 28–29debits and credits, 11defi ned, 25function of,...

  • Page 365

    345345 IndexCash Credit column (Cash Disbursements journal), 79Cash Debit column (Cash Receipts journal), 77Cash Disbursements journalcredit-card fees, 216described, 13example of, 58posting bill payments, 217posting transactions, 77–79recording bills accrued, 217setting up, 79summarizing, 57–...

  • Page 366

    346 Bookkeeping For Canadians For Dummies closing an accounting cycle, 31, 314–318closing balance, 227closing date (QuickBooks), 314, 315combined income tax, 162–163commission cheques, 159, 169–170Common Shares accounts, 45, 271Company & Financial Report Finder (QuickBooks), 245, 246Com...

  • Page 367

    347347 Indexcredit cardaccepting, 143fees, 142, 214–215interest, 201online processing, 100reconciling your statements, 215–216Credit Cards Payable account, 44credit lines, 201–204credit sales, 28, 143–147credit voucher, 113current assetsaccounts for, 40–41balance sheet, 268described, 38...

  • Page 368

    348 Bookkeeping For Canadians For Dummies depreciation (continued)tangible assets, 270taxes and, 193–195units of production/units of activity, 188, 190–191Depreciation Expense account, 48, 69, 196, 251direct tips, 171directors (corporation), 306discountsfor credit card fees, 214for early bill...

  • Page 369

    349349 IndexEmployee’s PPIP insurable earnings (T4 form), 299Employee’s PPIP premiums (T4 form), 299employer taxesCPP/QPP and EI, 176–178late payment penalty, 177–178overview, 175Employment code (T4 form), 298Employment income (T4 form), 297Employment Insurance (EI)as accrued payroll taxe...

  • Page 370

    350 Bookkeeping For Canadians For Dummies fi nancial reports. See also balance sheet; income statementCash Flow reports, 246comparing actual spending to budget, 292, 325computerized, 245–247customize-designed, 247defi ned, 334developing, 17, 243–245external versus in-house, 291–292fraud pre...

  • Page 371

    351351 IndexGeneral Ledgercomputerized transactions, 70–71corrections or adjustments, 69–70, 231–232, 258described, 12, 29, 335entries for, 56–62errors, 228, 241fi nalizing, 314–315journals posted to, 87–88, 231–232maintaining, 12payroll accounts, 172–173point of original entry, 6...

  • Page 372

    352 Bookkeeping For Canadians For Dummies income statement (continued)preparing, 282–285Profi t or Loss, 245, 281quarterly statement, 279Return on Assets (ROA) ratio, 290, 388Return on Equity (ROE) ratio, 290–291, 388Return on Sales (ROS) ratio, 289–290, 388returns on sales, 292Sales or Rev...

  • Page 373

    353353 Indexlate fees or interest, avoiding, 136late payment penalty (T4 forms), 300LC & NRV (lower of cost and net realizable value), 336leasehold improvements, 41, 269, 336Legal and Accounting account, 49liabilities. See also current liabilitiesaccounts for, 43–45balance sheet, 266, 270...

  • Page 374

    354 Bookkeeping For Canadians For Dummies • O •offi cers (corporation), 306on accountbad debt and, 255described, 28, 140, 337recording sales, 144–147sales returns and, 151opening inventory, 283operating cash fl ow, 337operating expenses, 280, 337operating line of credit, 337operating profi ...

  • Page 375

    355355 IndexPension adjustment (PA) (T4 form), 299pension plans. See Canada and Québec Pension Plans (CPP/QPP)periodic inventory system, 126, 337perpetual inventory system, 126, 337Personal Tax Credits Return TD1 form, 156–158petty cash, 110–111, 337PIR (Partnership Information Return), 309p...

  • Page 376

    356 Bookkeeping For Canadians For Dummies Québec and Canada Pension Plans (continued)sole proprietorship, 308tracking, 44when to fi le, 177–178Québec Enterprise Number (NEQ), 18Québec Sales Tax (QST), 18quick ratio (acid test), 276–277, 338QuickBooks. See also computerized accounting syste...

  • Page 377

    357357 Indexfraud prevention, 119Income & Expenses report, 246preparing and analyzing, 119worksheets, 243–245Request for a Business Number (BN) form, 18, 19–23Request for Destruction of Records (T137 Form), 116residual value of assets, 188, 338RESPs (Registered Education Savings Plans), 1...

  • Page 378

    358 Bookkeeping For Canadians For Dummies savings (continued)Registered Education Savings Plans (RESPs), 164Registered Retirement Savings Plans (RRSPs), 164, 165Tax-Free Savings Accounts (TFSA), 164schedulesamortization, 206–207depreciation, 195–196school services (employee benefi t), 167scra...

  • Page 379

    359359 IndexTax-Free Savings Accounts (TFSA), 164TD1 Personal Tax Credits Return form, 156–158Telephone and Internet account, 50T4 Form (Statement of Remuneration Paid), 296–302T4 slip, 182, 295–300TFSA (Tax-Free Savings Accounts), 164theft or pilferage, 112–113, 117three-ring binders, 11...

  • Page 380

    360 Bookkeeping For Canadians For Dummies Web sites (continued)Canada Revenue Agency (CRA), 116Canadian Department of Justice, 159GST/HST registration, 18Industry Canada, 99industry trends, 288Intuit, 99Kelley Blue Book, 85–86workers’ compensation program, 178–179, 339work-in-process invent...

  • Page 381

    Notes____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________...

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    Notes____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________...

  • Page 383

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  • Page 387

    Lita Epstein, MBACécile Laurin, CALearn to:• Keep track of transactions• Produce financial statements• Manage a business• Follow government tax rulesBookkeepingFor Canadians Making Everything Easier!™ Open the book and find:• How to keep track of transactions• The top...