Accounting Manager

You must be very good at statistics if you want to do well in accounting. Otherwise, with minimum knowledge you cannot manage your day to day transactions effectively in accounting.

Financial statement of the company includes various information like

☛ Balance Sheet ( Assets, liabilities, and equity)

☛ Income statement ( Profit or Loss statement)

☛ Equity statement

☛ Cash flow statement

In a bank reconciliation statement, following thing can be excluded.

☛ Direct payments made by bank not entered in Cash book

☛ Cheques deposited but not cleared

☛ Cheques dishonoured not recorded in cash book

☛ Wrong debits given by bank

☛ Bank Charges or Interst debited by bank

☛ Banks direct payment not entered in Cash book

Yes, I have prepared few MIS reports during my previous jobs. MIS reports are created to identify the efficiency of any department of a company.

The rules for debit and credit for different accounts,

☛ for a capital account, you credit to increase it and debit to decrease it

☛ for an asset account, you debit to increase it and credit to decrease it

☛ for a liability account, you credit to increase it and debit to decrease it

☛ for an expense account, you debit to increase it, and credit to decrease it

☛ for an income account, you credit to increase it and debit to decrease it

As per fair value accounting, a company has to show the value of all of its assets in terms of price on balance sheet on which that asset can be sold.

☛ Asset: What financial institute (bank) or people owe you

☛ Liabilities: It is something you owe people or organization

☛ Equity: It is something you own, for example, the amount of your house loan you paid off

The accounting events that are frequently involved in compound entries are;

☛ Record multiple line items in a supplier invoice that address to different expenses

☛ Record all bank deductions associated to a bank reconciliation

☛ Record all deduction and payments related to a payroll

☛ Record the account receivable and sales taxes related to a customer invoice

Not much knowledge but basic mathematical background is required in accounting for operations like addition, subtraction, multiplication and division.

The general classification of accounts that usually ledger account involves are

☛ Assets- Cash, Accounts Receivable

☛ Liabilities- Accounts Payable, Loans Payable

☛ Stockholders’ equity- Common Stock

☛ Operating revenues- Revenues through Sales

☛ Operating expenses- Rent Expense, Salaries Expense

☛ Non-operating revenues and gains- Investment Income, gain on Disposal of Equipment

☛ Non-operating revenues and losses- Interest Expense, Loss on Disposal of Equipment

☛ Wage accrual is entered with a credit to the “wages payable account”

☛ Interest accrual is entered with a credit to the “interest payable account”

☛ Payroll tax accrual is entered with a credit to the “payroll taxes payable account”

The difference between accumulated depreciation and depreciation expense is that

☛ Accumulated depreciation: It is the total amount of depreciation that has been taken on a company’s assets up to the date of the balance sheet

☛ Depreciation expense: It is the amount of depreciation that is reported on the income statement. Basically, it is the amount that corresponds only to the period of time indicated in the heading of the income statement.

Due to double entry, the “cash account” will increase as such the liability account increases.

Liability can be defined as an obligation towards another company or party. It may consist of delivering goods, rendering services or paying money. They are the opposite of assets, and it may include

☛ Account payable

☛ Interest and dividend payable

☛ Bonds payable

☛ Consumer deposits

☛ Reserves for federal taxes

☛ Short term loans

The three factors that can affect your cash flow and business profit includes

☛ Cash flows from investing activities: It includes shares, bonds, physical property, machineries, etc.

☛ Cash flows from operating activities: It does not include cash received from other sources like investments

☛ Cash flow from financing activities: It includes any activities that involves dividend payments that the company made to its shareholders, any money that includes stock to the public, any money borrowed from the lender etc. in other words, it is a report that tells the firm about the money borrowed and paid out in order to finance its activities.

Some of the examples for liability accounts

☛ Accounts Payable

☛ Accrued Expenses

☛ Short-term Loans Payable

☛ Unearned or Deferred Revenues

☛ Installment Loans Payable

☛ Current Portion of Long-term Debt

☛ Mortgage Loans Payable

As the name implies, the dual aspect concept states that every transaction has two sides. For example, when you buy something, you give the cash and get the thing. Similarly, when you sale something, you lose the thing and gets the money. So this getting and losing is basically two aspects of every transaction.

The cash flow statement showcase the cash generated and used during the year or months. Various activities that are involved for the Cash Flow are

☛ Operating activities – business activities accounting to cash

☛ Investing activities – sale and purchase of equipment or property

☛ Financial activities- purchase of stock and own bonds

☛ Supplemental information- exchange of significant items that don’t involve cash

Double entry book-keeping involves five types of accounts,

☛ Income accounts

☛ Expense accounts

☛ Asset accounts

☛ Liability accounts

☛ Capital accounts