Bookkeeping & Write-up

Kiting refers to the practice of depositing and drawing checks at 2 or more banks and taking advantage of the time it takes for the 2nd bank to collect funds from the 1st bank. It also is a bookkeeping trick to illegally increase the face value of a check by changing the numbers on the check.

An aging schedule is a table of accounts receivable broken down into number of day ranges (age categories) such as 0-30 days = 1 month, 30-60 days = 2 months, and 60-90 days = 3 months, The aging schedule is used to determine if customer payments are keeping close to schedule or late or possible uncollectable.

If you are filing a form without a payment, mail Form 941 to IRS Cincinnati OH 45999-0005. If you are filing a form with a payment, mail Form 941 to IRS P.O. Box 804522 Cincinnati OH 45280-4522

Forecasting is a projection of the anticipated financial performance of a company. Forecasts typically include a projected income statement, a pro-forma balance sheet and a cash flow statement. In order to arrive at projected figures, extensive research should be done to including statistical information on the competition, product trends and client demographics. This information will help you obtain reasonable estimated sales amounts. You should also get quotes from suppliers and realtors to obtain estimated expense amounts. Projections are not a picture of what you would like to see happen to your company, but carefully calculated, realistic numbers. Speak to your local CPA to assist you in this process.

The realization concept states that a accounting transaction takes place only for those economic events to which the entity is a party. This principle rules out recognizing a gain based on the appreciated market value of a still owned asset. A gain or loss on a marketable security occurs only when sold, not on the daily fluctuation of the share price.

The matching principle states that income is calculated by matching a period's revenues with the expenses incurred in order to bring about that revenue. The accrual concept is used to accomplish the matching principal. The bookkeeper will set up accruals of income earned but not received and expenses incurred but not paid to get a better matching of the company's income and expenses for a period.

The consistency criterion states that the accounting procedures used at a given time should conform to the procedures previously used for that activity. Such consistency allows data of different periods to be compared. This is important for comparative financial statements such as the income sheet, balance sheet and cash flow statement. If there is a change in the consistency or accounting methods, the financial statements have to be restated for consistency purposes.

The conservatism doctrine states that when exposure to uncertainty and risk is significant, an accounting entry should be made and accounting measurement and disclosure should take a cautious and prudent stance until evidence shows sufficient lessening of the uncertainty and risk. The allowance for bad debt account is an example of the realistic approach needed in the conservatism doctrine.