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Accounting has
surely changed since I started in the profession. The proliferation of
home-based businesses, the personal computer, and small business
accounting packages have changed how small businesses do their books. Many
small companies do their accounting do-it-yourself style, using some very
sophisticated software. QuickBooks™ offers powerful accounting solutions
for small businesses. One thing that has not changed, however, is the
“accountant’s shoe box”!
At least annually, usually around tax time, CPAs could expect to see some
client’s bookkeeping and records that are literally loose papers in a shoe
box. This still happens, but with the advent of the PC and accounting
software, the shoe box has morphed! The shoe box has changed to an
electronic mess. The jumble of receipts, slips, invoices, statements, and
messy notes that the client wasn’t sure what to do with, have now been
electronically coded and entered into “the books.” Payments, invoices,
loans, deposits, assets, investments, draws, payrolls, statements,
receipts, purchases, and other transactions are sorted, and reported, as
if the electronic jumble were a usable information report.
A client recently insisted, because he had designed it so, that the
minuses (debits or expenses) in the sales accounts (credit or revenue)
were necessary to show the sales not paid for, so they didn’t pay tax on
money not received. There were no accounts receivable in the balance
sheet, so the corrections were preposterous. The balance sheet was full of
reverse signs that made the accuracy of the books meaningless. People who
couldn’t pass high school bookkeeping are now maintaining accounting
systems. Supporting this claim, a popular small business accounting
package proudly boasts “no accounting knowledge” needed. They say, all one
does is write checks and issue other forms, and the software will handle
the rest. This is sort of true. But, there are some things you should know
first, like the Theory of Accounts.
The broad Theory of Accounts goes something like this:
There are five primary account types: assets, liabilities, equity,
revenue, and expenses.
You should understand how account balances increase or decrease (debits
and credits).
You should practice the separate entity, matching principle, continuity,
and time period assumptions.
You should know something about generally accepted accounting principles (GAAP).
You should understand the operating cycle and direct, indirect, fixed,
variable, and operating expenses.
A basic understanding of economics is a good thing.
The primary goal of an accounting system is to provide correct information
for management to make informed decisions. Bad decisions waste resources;
good decisions generate profits. Good decisions are founded on correct
information. This results in economic survival.
One of the small business software user’s challenges is that there has
been no affordable way to get hands-on training in both accounting and the
software package. Until now.
On Tuesday, June 1, 1999, the Lansing Community College Small Business
Development Center; Carolan and Associates PC-CPA; and Maner, Costerisan
and Ellis, PC-CPAs will present QuickBooks (TM): An Accounting Primer for
Small Business. The program will feature QB basics that are essential to a
successful record-keeping system. Some of the key points:
Accounting Basics and QuickBooks (TM);
Designing your chart of accounts, lists, and other
Closing your records, adjustments, and reporting
Payroll, the IRS, and Michigan, and paying tax liabilities
Accounts receivable: invoicing, statements, and payments
Accounts payable: bills, statements, and payments.
This training session is the first part of a four-part program,
progressing quarterly, and focusing on advanced learning. The goal: to
keep bookkeepers and small business owners in pace with the QuickBooks™
numerous upgrades and changes. Competent speakers will train, explain,
coach, and show, the extraordinary power of QuickBooks™. In addition the
program will facilitate networking with other QB users to solve those
nasty accounting problems, “that only your business has.”
This continuing education program is committed to stamping out the
“accountant’s electronic shoe box.” If we can’t stamp it out, we will at
least dent the cardboard box-top of accounting malfeasance.
For more information call 483-1921.
Eugene Carolan owns Carolan & Associates. |
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