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Accounting assignment homework help

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What do all the C's, M's, G's, I's, P's and A's Mean?

CB - Certified Bookkeeper

The work of a Certified Bookkeeper is interesting, stimulating and varied. They work for public accounting firms, both small and large, as well as small neighborhood businesses. As essential members of the organization they are involved in many aspects on a daily basis.

CFE - Certified Fraud Examiner

The CFE designation is restricted to Associate Members of the Association of Certified Fraud Examiners in good standing who have the proven expertise to detect, prevent, and investigate a wide range of fraudulent conduct.

CFM - Certified in Financial Management

Designed to recognize the unique qualifications and expertise of those professionals engaged in management accounting and financial management.

CGA - Certified General Accountant

Certified General Accountants are professional accountants who have acquired their accounting education through and are members of the Certified General Accountants Association.  Many CGAs own their own accounting firms and provide tax and financial advice to individuals and to businesses of all sizes. Other CGAs are employed in senior positions in industry, commerce, academia and government.  As trusted accounting professionals, CGAs offer the highest standards of expertise in taxation, finance, information technology and strategic business management.

CIA - Certified Internal Auditor

Reflected competence in the principles and practices of internal auditing and has served as the only internationally accepted designation for internal auditors.

CMA - Certified Management Accountant

Certified Management Accountants are strategic and financial management professionals who combine accounting expertise and business acumen with professional management skills to provide leadership, innovation and an integrating perspective to organizational decision-making. They apply contemporary and emerging best management practices in a wide array of business functions, including strategic planning, sales and marketing, information technology, human resources, finance, and operations. CMAs bring a strong market focus to strategic management and resource deployment, synthesizing and analyzing financial and non-financial information to develop total business solutions, identify new market opportunities, and maximize shareholder value.

CPA - Certified Public Accountant

CPAs are many things. A public accountant who has been certified by a state examining board as having met the state's legal requirements. They are chief financial officers for Fortune 500 companies and advisors to small neighborhood businesses. They work for public accounting firms, both small and large. They are well-respected strategic business advisors and decision-makers. They act as consultants on many issues, including taxes and accounting.

CPB - Certified Public Bookkeeper

PB - Professional Bookkeeper

Building on basic general accounting concepts, the Professional Bookkeeper is seen as an Affordable Professional Alternative to a self-preparation, a CPA or an independent tax professional for the following taxpayer segments: (1) professionals, (2) small business owners, and (3) small not for profits. The PB designation can only be used by the graduates of the Universal Accounting Center. 

for more information kindly visit http://www.bookkeeperlist.com/cga.shtml

what is the meaning of invoice?

A formal request for payment; a written record of a transaction submitted to customer or client when requesting payment for services or goods delivered; includes taxes where applicable; also called bill and sometimes statement though the term statement has a different meaning that does not include a formal request for payment
 

Top 10 Software Companies in India

Top 10 Software Companies in India

Rank                             Name                                           Sales (in Rs mill)
1                  TCS LIMITED                         97,272
2                  WIPRO LIMITED                       82,330
3                  INFOSYS TECHNOLOGIES LIMITED        71,297
4                  SATYAM COMPUTER SERVICES LIMITED    35,209
5                  I-FLEX SOLUTIONS LIMITED            11,386
6                  TATA INFOTECH LIMITED                9,743
7                  CMC LIMITED                          8,074
8                  MPHASIS BFL LIMITED                  7,657
9                  MASTEK LIMITED                       5,670
10                 NIIT LIMITED                         3,984

http://www.hamariduniya.com/wIndex.asp?Action=General-Info-3.asp

Top 100 Tech Companies In India

Top 100 Tech Companies In India

1) Bharat Sanchar Nigam Limited 2) Tata Consultancy Services 3) Bharti Airtel Limited 4) Wipro Ltd 5) Infosys Technologies Limited 6) Hewlett-Packard India 7) HCL Infosystems Limited 8) Reliance Communications Ltd 9) LG Electronics India Pvt Ltd 10) IBM India Pvt Ltd 11) Videocon Industries Ltd 12) HCL Technologies Limited 13) Satyam Computer Services Ltd 14) Siemens Ltd. 15) Samsung India Electronics Pvt. Ltd. 16) Mahanagar Telephone Nigam Ltd 17) Redington (India) Limited 18) Cognizant Technology Solutions 19) Idea Cellular Ltd 20) Videsh Sanchar Nigam Limited 21) Bharat Electronics Limited 22) Tech Mahindra Limited 23) Philips Electronics India Ltd 24) Bharti Teletech 25) Sony India Limited 26) Moser-Baer India Ltd 27) i-flex Solutions Ltd 28) Exide Industries Ltd 29) ITI Limited 30) MphasiS Limited 31) MIRC Electronics Limited 32) Cambridge Solutions 33) Tata Teleservices Maharashtra Limited (TTML) 34) Larsen & Toubro Infotech Limited 35) Sterlite Optical Technologies Ltd 36) GTL Limited 37) Samtel Color Limited 38) Teledata Informatics Ltd 39) Finolex Cables Ltd 40) Patni Computer Systems Ltd 41) CMC Limited 42) Perot Systems Tsi (India) Ltd 43) Sonata Software Limited 44) Polaris Software Lab Limited 45) NIIT Technologies Ltd 47) Acer India Pvt Ltd 47) Salora International Limited 49) Tulip IT Services Ltd 50) Eveready Industries India Ltd

51) iGate Global Solutions Ltd 52) Prithvi Information Solutions Limited 53) Avaya Global Connect Limited 54) Aricent Technologies (Holdings) Limited 55) Rolta India Limited 56) 3i Infotech 57) Honeywell Automation India Limited 58) Amara Raja Batteries Ltd 59) Mindtree Consulting Limited 60) Birlasoft Ltd 61) Mascon Global Ltd 62) Sify Limited 63) Infotech Enterprises Ltd 64) Mastek Limited 65) Sasken Communication Technologies Ltd 66) Rashi Peripherals Pvt Ltd 67) Kpit Cummins Infosystems Ltd 68) Savex Computers Limited 69) Avnet India 70) Zylog Systems Ltd 71) NIIT Ltd 72) Canon India Pvt Ltd 73) Geometric Software Solutions Co Ltd 74) Genus Overseas Electronics Limited 75) Subex Azure Ltd 76) WeP Peripherals Limited 77) Zenith Computers Ltd 78) D-Link India Ltd 79) Nippo Batteries Co. Ltd 80) Aftek Infosys Ltd 81) Shyam Telecom Limited 82) Paramount Communications Ltd 83) ORG Informatics Limited 84) Persistent Systems Pvt. Ltd 85) Tata Elxsi Ltd 86) Northgate Technologies Ltd 87) Numeric Power Systems Ltd 88) Zensar Technologies Ltd 89) Cranes Software International Ltd 90) Phoenix Lamps Ltd 91) TVS Electronics Ltd 92) MIC Electronics Limited 93) Intex Technologies (India) Ltd 94) Opto Circuits India Ltd 95) Aztecsoft Limited 96) Supertron Electronics Ltd 97) Delta Energy Systems (India) Pvt. Ltd. 98) Panasonic Battery India Company Limited 99) FCI OEN Connectors Limited 100) Megasoft Ltd

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Visual merchandising

Visual merchandising is the activity of promoting the sale of goods, especially by their presentation in retail outlets.(New Oxford Dictionary of English, 1999, Oxford University Press). This includes combining products, environments, and spaces into a stimulating and engaging display to encourage the sale of a product or service. It has become such an important element in retailing that a team effort involving the senior management, architects, merchandising managers, buyers, the visual merchandising director, designers, and staff is needed.

Visual merchandising starts with the store building itself. The management then decides on the store design to reflect the products the store is going to sell and how to create a warm, friendly, and approachable atmosphere for its potential customers.
Many elements can be used by visual merchandisers in creating displays, including colour, lighting, space, product information, sensory inputs such as smell, touch, and sound as well as technologies such as digital displays and interactive installations.
Visual merchandising is not a science; there are no absolute rules. It is more like an art in the sense that there are implicit rules but that these also exist to be broken for striking effects. The main principle of visual merchandising is that it is intended to increase sales, which is not the case with a "real" art.
Visual merchandising is one of the final stages in trying to set out a store in a way that customers will find attractive and appealing and it should follow and reflect the principles that underpin the store’s image. Visual merchandising is the way one displays 'goods for sale' in the most attractive manner with the end purpose of making a sale. "If it does not sell, it is not visual merchandising."
Especially in today’s challenging economy, people may avoid designers/ visual merchandisers because they fear unmanageable costs. But in reality, visual merchandisers can help economise by avoiding costly mistakes. With guidance of a professional, retailer can eliminate errors, saving time and money. It is important to understand that the visual merchandiser is there, not to impose ideas, but to help clients articulate their own personal style.
Visual merchandising is the art of implementing effective design ideas to increase store traffic and sales volume. VM is an art and science of displaying merchandise to enable maximum sale. VM is a tool to achieve sales and targets, a tool to enhance merchandise on the floor, and a mechanism to communicate to a customer and influence his decision to buy. VM uses season based displays to introduce new arrivals to customers, and thus increase conversions through a planned and systematic approach by displaying stocks available.
Recently visual merchandising has gained in importance as a quick and cost effective way to revamp retail stores.

To know more about kindly visit http://en.wikipedia.org/wiki/Visual_merchandising

Accounting shortly

Accrual Method of  Accounting

Mot business use the accrual method of accounting ,it is usually required by Law,when you issue an invoice on credit that regardless of whether it is paid or not, it is treated as a taxable supply on the date it was issued for income tax purposes or corporation tax for limited companies. The same applies to bills received from suppliers. This does not mean you pay income tax immediately, just that it must be included in that year's Profit and Loss account.

Bad Debts Reserve Account

An account used to record an estimate of bad debts for the year (usually as a percentage of sales). This cannot be deducted as an expenses against tax liability

Balance Sheet.

A summary of all the accounts of a business .Usually prepared at the end of each financial year. The term 'Balance sheet' implies that the combined balances of assets exactly equals the liabilities and equity.


Cash Flow: A report which shows the flow of money in and out of the business over a period of time.

Depreciation: The value of assets usually decreases as time goes by. The amount or percentage it decreases by is called depreciation. This is normally calculated at the end of every accounting period .it is shown in both the profit and Loss account and balance sheet of a business.

Ledger and Accounting

 Debtors Ledger :It contains the accounts of all the customers to whom the goods have been sold on credit. it is also known as Sales Ledger.

Creditors Ledger. It contains the accounts of all the suppliers or creditors who have supplied goods to the business on credit.it is also known as Bought Ledger.

General Ledger or Main Ledger :where all the transaction posted in double entry system.It contains all the accounts of business other than those of debtors and creditors. Accounts of all assets (other than debtors),Liabilities (other than creditors), capital, revenue, and expenses are recorded in this ledger.

As per Accounting Cycle ,Transaction are first Recorded in Journal, from where they are posted to the relevant accounts in the Ledger (included AP Transaction and AR Transaction) in the end of accounting year these accounts are balanced and Trial balance prepared to check arithmetical accuracy of accounts. After preparing Trial Balance Final accounts prepared to achieve the objectives of accountancy.

Final Accounts includes
                  a. Trading ,Profit and Loss Accounts
                  b. Balance Sheet
Financial Statement Prepared to show periodic performance of a business organisation and it's financial position at the end of such period.usually Profit and Loss and Balance Sheet collectively known as Financial Account.

Profit and Loss Accounts which all gains and losses are collected in order to ascertain the excess of gains over the losses or excess of loss over the gains.

Journal Entries

				Rs..	Rs..
Cash Account			Debited	5000
To	X capital Account				5000
Narration: Being the commencement of business with cash
				Rs..	Rs..
Bank Account			Debited	1000
To	Cash Account				1000
Narration:	Being cash deposited into Bank
				Rs..	Rs..
Furniture Account			Debited	1000
To	Cash Account				1000
Narration:	Being furniture purchased by cash
				Rs..	Rs..
Purchase Account			Debited	500
To	Cash Account				500
Narration:	Being Goods purchases of goods by cash Rs.500
				Rs..	Rs..
Purchase Account			Debited	200
To	Y Account				200
Narration:	Being Goods purchased on Credit from Y
				Rs..	Rs..
Cash Accounts			Debited	400
To	Sales Accounts				400
Narration:	Being Goods Sold by cash
				Rs..	Rs..
Z Accounts			Debited	700
To	Sales Accounts				700
Narration:	Being goods sold by Credit to Z
				Rs..	Rs..
Cash Accounts			Debited	630
Discount Allowed Accounts			Debited	70
To	Z Accounts				700
Narration:	Being cash received from Z and allowed Discount 10%
				Rs..	Rs..
Y Account			Debited	200
To	Discount Received				20
To	Cash Account				180
Narration:	Being Payment made by cash to Y and Received Discount 10%
				Rs..	Rs..
Cash Account			Debited	60
To	Commission Received				60
Narration:	Commission receipt in cash
				Rs..	Rs..
Depreciation Account			Debited	100
To	Furniture Account				100
Narration:	Being depreciation on furniture of Rs.1000 @ 10%
				Rs..	Rs..
Drawing Account			Debited	200
To	Bank Account				200
Narration:	Being cash drew for personal exp
				Rs..	Rs..
Salary Account			Debited	1000
To	Cash Account				1000
Narration:	Salary Paid
				Rs..	Rs..
Cash Account			Debited	600
Bad debt Account			Debited	400
To	G (Customer) Account				1000
Narration:	Sold Goods to G and got insolvent Dividend received @ 60 paise
				Rs..	Rs..
Cash Account			Debited	1000
To	Bad debts Recovered Account				1000
Narration:	Customer previously written off Bad debts Reconvered
				Rs..	Rs..
Charity Account			Debited	500
To	Purchase Account				200
To	Cash Account				300
Narration:	Being Donate Goods cost Rs.200 and Cash 300
				Rs..	Rs..
Cash Account			Debited	3200
Loss by Fire Account				800
To	Purchase Account				4000
Narration:	Being Insurance claim received 80% of value Rs,4000
				Rs..	Rs..
Salary Account			Debited	7000
To	Salary Outstanding Account				7000
Narration:	Being Staff salary outstanding
				Rs..	Rs..
Salary Outstanding Account			Debited	7000
To	Cash Account				7000
Narration:	Outstanding Salary Paid
				Rs..	Rs..
Cash Account			Debited	200
To	Accrued rent Account				200
Narration:	Accrued Rent on Building of Dec Received on Jan 2010
				Rs..	Rs..
Interest on Capital Account			Debited	500
To	Capital Account				500
Narration:	Interest allowed 10% on capital

Rules of Accounting

                                                                Rules of Accounting.

Personal Accounting:

                                 Debit the receiver(who get benefit)

                                 Credit the giver   (of benefit)

                                                                      Natural-Artificial:X A/C,Y A/C,SF CO A/C etc..

                                                                      Representative: Wages outstanding A/C, Prepaid Insu A/C

Real Accounts:

                                 Debit what comes in

                                 Credit what goes out

                                                                       Tangible:Plant A/C, Building A/C

                                                                       Intangible:Goodwill A/C, Copy Rights A/C

Nominal Accounts:

                                  Debit all expenses and losses

                                 Credit all incomes and gains
                                                                     Expenses : Purchase A/C, Wages A/C
                                                                     Losses     : Loss by Fire A/C
                                                                     Profit and Gains : Profit on sale of Assets A/C

Kinds of Accounts/Elements of Accounting

• Assets: it includes - Cash,Bank(dr.),Debtors,Stock,Bills Receivable,Prepaid Expenses,Accrued Incomes,Land & Building,Plant and Machinery,Furniture and fittings,Equipments,Tools,Goodwill,Copy Rights,Patent Rights,Advances etc...
• Liabilities it includes - Creditors, Bills Payable, Borrowings, Bank Loan, Outstanding Exp, Debentures, Overdraft etc..
• Capital it includes - Capital Account and Drawings Account.
• Revenue it includes - Bad debts recovered, Interest Received, Commission Received, Sales, Rent Received, Dividend received etc...
• Expenses and Losses it includes - Exp and Losses ,Salaries, Wages, Carriage, Postage, Stationery, Advertisement, Rent, Bad debts, Purchases, Loss on sale of assets, Loss by theft etc..

                                                    
   

Accounting Standard and shortly brief of Book Keeping.

What is Accounting Standard?
It is a selected set of accounting policies or broad guidelines issued by an accounting body, regarding the principles and methods to be chosen out of several alternatives.that are followed for preparation of financial statements.it guide the treatment of transactions and events in the accounting process.

 Basis of Accounting Systems.
           A set of rules that the accountant follows in preparing three basic financial reports-Profit and loss account,Balance sheet and Cash flow statement. It tells when it count certain transactions in the records and how to do it.
        
Accrual or Mercantile Basis:
           The method of Transactions by which revenues, costs, assets and liabilities are reflected in accounts in the period in which they accrue. All the Income and Expenses are recorded in the books even transaction already done but cash not received during the accounting period, It is relating to Outstanding, prepaid, accrued (due but not received) and received in advance.

 this method is based on accounting technicalities, this method followed by business houses engaged in trading and manufacturing.

Cash or Receipt Basis:
            The method of recording transactions under which revenues, costs, assets and liablities are reflected in the accounts in the period which acctual received and actual payment are made.
                  which are outstanding such as Salaries due,rent unpaid, etc The profit under this system is calculated on the basis of the revenue received in cash during the accounting period less the expenditure incurred in cash during that period.
 

               Very few company use Cash Basis Method: 
                 1it does not give accurate picture of the profit and loss
                 2.Bank may not allow to use cash basis, it wants to know what you are earning or losing and cash
                    method is not good indicator of that.
                 3.Income tax law may not allow to use it.
   cash basis method mostly used by doctors,engineers,clubs,societies.
Tax Basis :
        This is the modified version of  accrual basis,Income tax law are used in deciding how to record transaction. but main difference between is that how you calculate depreciation. tax rules not let you deduct and expenses in the same period that you record it under accrual basis reporting.

kNOW The Basic of Accounting???

Accounting software is application software that records and processes accounting transactions within functional modules such as accounts payable, accounts receivable, payroll, and trial balance. It functions as an accounting information system. It may be developed in-house by the company or organization using it, may be purchased from a third party, or may be a combination of a third-party application software package with local modifications. It varies greatly in its complexity and cost.

what is General Ledger (GL) ?
The general ledger is where all accounting transactions are posted in a double entry system using debits (on the left) and credits (on the right) for each transaction. An additional column to the far right can keep a running total of activity in the account, similar to your checkbook.

The debit and credit entries impact at least two ledger accounts and it is usual to capture enough information in each leg of the entry to be able to identify the other one. To extend the comparison to your checkbook, if you also had a register for the types of income and expenses you receive and pay, you could set up a general ledger for yourself.


The general ledger provides data for the Balance Sheet and either the Single-Step Income Statement or the Multi-Step Income Statement (depending on which one the company prepares.) The ledger can be electronic or physical depending on whether you are using computer software or a manual system. Most comapnies use a computerized version of the general ledger, allowing for greater ease of entry and reporting.

What is Accounts Receivable ?
who owe money to a person, company or organization for goods and services that have been provided to the customer. In most business entities this is typically done by generating an invoice and mailing or electronically delivering it to the customer, who in turn must pay it within an established time frame called credit or payment terms.

What is Accounts Payable ?
is a file or account that contains money that a person or company owes to suppliers, but has not paid yet (a form of debt). When you receive an invoice you add it to the file, and then you remove it when you pay. Thus, the A/P is a form of credit that suppliers offer to their purchasers by allowing them to pay for a product or service after it has already been received.

Return On Investment (ROI)/Investment/Asset

A Performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments ,To calculate ROI, The benefit of an investment is divided by the cost of the investment, the result is expressed as a percentage or a ratio.

Investment Formula is ROI=Benefit of an investment/Cost of Investment

What is Investment???????????????????????????

An asset or item purchase to use in business for earning purpose or generate income in future ,they have monetary value.

Asset ???????????????????????????????????

           A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit


Asset are either Current or Fixed

           Current means Assets will be consumed with in one year like Cash ,AR ,Inventory

           Fixed means which Assets will be using in business more then one year for the aim of Profit like ,Building, Equipment etc...

What does Assets Valuation Means???????????????

         The current worth of a Portfolio, Company, Investment, Balance sheet.

Asset and liability basics

Knowledge of accounts can make life much easy. If you are to invest in a new business or joining your forefather’s business, planning to take some loan, looking for job in any marketing company, desire to be the manager of a multinational company or have the onus to manage your own assets and liabilities, knowing some basics of accounts becomes mandatory. Broadly, accounting is bifurcated into two categories- Cash Bases Accounting Accrual Accounting The Cash Based accounting pertains to the management of an individual’s personal monetary transactions. In this case, he keeps a track of the money he withdrew, deposited, gave or received from someone etc. This accounting comes to life when actual cash transactions take place. The Accrual Accounting requires an accountant who notes the transactions even if no money has been actually exchanged. This method works on the principle of comparing or seeing the ratio of the expenses to expenditure. If the expenditure is more, you need to cut down your luxuries, if not then it’s always good to have some savings for future. This type of accounting tells you the amount that you owed; this might not match with the figure of your bank balance. In the language of accounting there are several key terms that one needs to be familiar with. Some of the crucial ones are discussed below- The Assets- the assets are generally those possessions of an individual that have a good market value or are quite valuable. Assets are mainly classified into three types- Current Asset- the cash is the most basic asset of any individual. The money that is being held in accounts like the checking and savings accounts is also included in the cash. Also inclusive are the marketable securities in the form of bonds, stocks, shares etc. The money lent or payments due from clients, even form a part of it. Fixed Asset- comprises of all the tangible valuable things like property, machines, equipments, land and the like that are not meant to be sold. Intangible Asset- incorporates all the untouchable things like copyrights, patents, trademarks etc. that have tremendous monetary significance. The law of opposites governs the nature; where there are assets, there will be liabilities. These are the debts that you have to pay back to your creditors. This can be done through giving cash or any other asset like jewelry, some other goods etc. Liabilities again are of two kinds- 1. The Current Liabilities- the liabilities that are to be paid back within a certain time limit and most often through your current assets. These include the accounts payable i.e. type of bill that you have to monthly, the Notes Payable-loans taken from banks meant to be repaid within 30 days and the Accrued Expenses- the compulsory expenses like taxes, wages, interests etc. where the bills are not received but the balances of each must be repaid. 2. Long Term Liabilities- those debts that can be repaid at ease for the tenure is more then a month. The Financial Capital- is the economic capital. It is any liquid medium or merchandise that stands for wealth or other styles or capital. There are four ways to manage and display the financial capital. First, this capital is needed when a contract is made with any sort of capital asset. The financial instruments work in the form of currency in case of sale, purchase or trade of goods i.e. the medium exchanges. Second, it works as a settled medium or mode like gold for the Standard of Deferred Payment. Third, The Unit of Account has a market value attached to it which in turn varies with the economy of the country. Fourth, The Source of Value is concerned with financial capital that needs to be saved and recovered. It is a collection of things like gold, real estate, collectibles etc. Petty Cash is an important factor in business. It is the smallest account within a business setting or the cash in bills and coinage required to pay little expenses. Types of Business- there are several kinds of business one should be aware of like Sole proprietorship- where a single individual who starts the business owns it too. Partnerships- the companies or businesses started by two or more persons where they conjointly own it. Corporations- involve lot many shareholders or investors who are responsible in taking decisions for the company. Limited Liability Companies- can be said to be sisters of corporations. Here the business members are not under a legal obligation to pay the debts if the business fails. Payrolls- the term payroll designates the manner in which you will be paying the employees of your company and even yourself. Many multinational companies cater to payroll service provider companies that do the work quite efficiently. These are some of the broad guidelines that will help you grasp the basics of accounting. It is essential to have some such wisdom for accounts as it is fruitful in all walks of life. About the author:by: Mansi gupta Mansi gupta writes about asset and liability Learn more at http://www.assetsandliabilitiesbook.com

Accounting Methods – Cash and Accrual

When starting a business, you have to determine the method you are going to use for accounting and paying taxes. The two choices are the cash method and the accrual method.

Cash Method

If you are looking for simplicity, the cash method is probably your best accounting choice. Generally, income and deductions can be claimed when payment is actually received or made. This is best shown with an example.

I open a small business and have to order business cards and stationary. I receive the products and pay the invoice on November 18, 2005. Under the cash method, I can deduct the cost on my 2005 tax return.

Some businesses are restricted from using the cash method. C corporations may only use the cash method if they have less than $5 million in gross revenues for a particular year. Professional Service Corporations can use the cash method without limit, while farming corporations can due so if gross revenues are less than $25 million. Tax shelters are prohibited from using the cash method.

Accrual Method

The Accrual Method of accounting is a bit more complex. Under this method, the focus in on the date the expense is incurred, not paid. Although this may seem a small difference, it can play havoc with your books and piece of mind.

Using our previous example, assume I order business cards and stationary on the December 18, 2005. I receive the products on December 30th, but don’t pay the invoice until January 20, 2006. When can the expense be claimed? It depends on when economic performance occurred.

Generally, economic performance occurs when goods or services are provided to you. In the above example, economic performance would arguably occur when the business cards and stationary were delivered with the invoice on December 30th. Thus, I would be able to deduct the expense for the 2005 tax year.



About the author:
Richard Chapo is with Business Tax Recovery - Stop overpaying small business taxes. Read more business tax articles.

Accounting Police

Dear Friend here I got something new regarding Accounting Police ,take your own time and Read it ,it may interest to you and anymore details kindly visit below website.


Accounting Police: Do They Exist?
 by: John Day
Who created accounting principles? Who sets and revises accounting standards? What if you don’t follow all the rules, do you go to jail? Is there an accounting police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works:
Mainly, it’s all voluntary and it works pretty well. First, double-entry accounting originated in Italy in the 1400’s, so its been around awhile. Accounting principles have evolved over the years just as have accounting standards. The reason why the system works is that the business community could not function if there was not commonality and consistency in financial statement reporting. It would be chaos, much like if there were no driving rules of the road.
Therefore, in the United States, a body of experts known as the Financial Accounting Standards Board (FASB pronounced Fasbee) was established in 1973, which superseded another board called the Accounting Principles Board (APB). The FASB members go through a lengthy process of analyzing and reviewing problems in the accounting field that are brought to them. After much thought, they will make a pronouncement as to what they think the new or revised way of approaching the treatment of an accounting issue should be.
They are a non-governmental organization that has private financing. A big supporter of FASB is the American Institute of Certified Public Accountants (AICPA). Many Certified Public Accountants (CPAs) belong to this prestigious organization and are obligated to abide by its guidelines and principles of behavior. Other countries no doubt have similar organizations that require high levels of accounting professional conduct.
FASB established an accounting code called “Generally Accepted Accounting Principles” or (GAAP). The assumption is that if a business financial statement is prepared according to GAAP, then the user of that financial statement could rely on or trust the information more readily than if not prepared according to GAAP. Those businesses that deviate from GAAP, and many smaller businesses do, cannot say that their statements are prepared under GAAP; in fact, they should inform the reader that they are not. However, let the buyer beware.
One governmental body that has a policing function is the Securities Exchange Commission (SEC). It is primarily concerned with public companies because their job is to protect investors from unscrupulous acts. Recently, the SEC has gotten into the act of establishing accounting standards. It has its hands full today.
Since most businesses use their financial statements to prepare their required income tax returns, the Internal Revenue Service (IRS) may audit those tax returns and review the financial statements upon which the tax returns are based. Not following the rules can get you in trouble with this governmental body.
You can see that in many ways compliance to the principles and standards is a mixture of voluntary and regulatory behavior. Currently, there is an effort underway to set international accounting standards due to the inexorable globalization process. This is a massive undertaking that will take years, but it is obviously necessary and inevitable.

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