Accounting Tips:

Accounting tips:
Understand Double-Entry debit/credit accounting:
Definitions of credit/debit:
0) A debit or credit are both types of parts of a money transaction in a double entry bookkeeping system.

1) A credit always does the opposite to a particular account that a debit does.

2) In a complete transaction in a double entry bookkeeping system, the sum of the credits must equal the sum of the debits for the transaction to be in balance.

3) Since in the world there are only two kinds of accounts, your companies, and all the other companies in the world, credits and debits should act one way on your accounts, and exactly the opposite on other companies' accounts, so that money either flows from you to others or from others to you.

4) A chart of accounts represents both types of accounts, so that credits and debits must follow all the rules above.

DEBIT	ACCOUNT CATEGORY	CREDIT
+	1= your company ASSETS	-
-	2 = rest of world LIABILITIES	+
-	3 = rest of world EQUITIES	+
-	4 = rest of world REVENUE	+
+	5-9 = your company EXPENSES	-

Notes on usage: The Assets and Expenses model the activity of your company. The Liabilities, Equities, & Revenues model the rest of the world that lose something when your company gains something. This is why the debits and credits act opposite on you versus your others. If you gain, someone else must lose unless you are just converting some kind of value into another type within your own company. For example: You can reduce your checking balance so as to increase an expense category. One must memorize this table so that any question like: What does a credit do to a liability? One must be able to answer immediately that the credit would increase the liability account. This is how one learns to think about a new complex transaction that your company is having for the first time. One can understand that this new complex transaction must have certain effects on certain accounts and then figure out what the remaining effects must be in terms of a debit or credit of which accounts since the over-riding rule is that in any one transaction in a double entry accounting system the total of all debits must equal the total of all credits.

The plus under the debit column to the left of the Assets account category means that a debit will increase the balance of any Asset account.

For example: A REFUND CHECK COMES IN!

We know that the check will be deposited in the company checking account and that it must increase the checking account balance, right? What other account do I put the deposit to in my cash receipts area? The area where the original expense went is the place that you should put it to, but why and what effect will this have? Since we know that an increase in the checking account can only be caused by a debit because the account is an Asset account, we know that the expense account will be credited by the same amount. What does a credit do to your company's expense accounts. Looking at the chart, we see that the credit will decrease your company's expense. Doesn't that make sense? Make sense out of all your accounting packages transactions by understanding this chart and using it daily. Soon you will understand the Double Entry Accounting system.

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Accountants and auditors

Accountants and auditors help to ensure that firms are run efficiently, public records kept accurately, and taxes paid properly and on time. They analyze and communicate financial information for various entities such as companies, individual clients, and Federal, State, and local governments. Beyond carrying out the fundamental tasks of the occupation—providing information to clients by preparing, analyzing, and verifying financial documents—many accountants also offer budget analysis, financial and investment planning, information technology consulting, and limited legal services.

Specific job duties vary widely among the four major fields of accounting and auditing: public accounting, management accounting, government accounting, and internal auditing.

Public accountants perform a broad range of accounting, auditing, tax, and consulting activities for their clients, which may be corporations, governments, nonprofit organizations, or individuals. For example, some public accountants concentrate on tax matters, such as advising companies about the tax advantages and disadvantages of certain business decisions and preparing individual income tax returns. Others offer advice in areas such as compensation or employee healthcare benefits, the design of accounting and data processing systems, and the selection of controls to safeguard assets. Still others audit clients' financial statements and inform investors and authorities that the statements have been correctly prepared and reported. These accountants are also referred to as external auditors. Public accountants, many of whom are Certified Public Accountants (CPAs), generally have their own businesses or work for public accounting firms.

Some public accountants specialize in forensic accounting—investigating and interpreting white-collar crimes such as securities fraud and embezzlement, bankruptcies and contract disputes, and other complex and possibly criminal financial transactions, including money laundering by organized criminals. Forensic accountants combine their knowledge of accounting and finance with law and investigative techniques to determine whether an activity is illegal. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials.

Management accountants—also called cost, managerial, industrial, corporate, or private accountants—record and analyze the financial information of the companies for which they work. Among their other responsibilities are budgeting, performance evaluation, cost management, and asset management. Usually, management accountants are part of executive teams involved in strategic planning or the development of new products. They analyze and interpret the financial information that corporate executives need to make sound business decisions. They also prepare financial reports for other groups, including stockholders, creditors, regulatory agencies, and tax authorities. Within accounting departments, management accountants may work in various areas, including financial analysis, planning and budgeting, and cost accounting.

Government accountants and auditors work in the public sector, maintaining and examining the records of government agencies and auditing private businesses and individuals whose activities are subject to government regulations or taxation. Accountants employed by Federal, State, and local governments ensure that revenues are received and expenditures are made in accordance with laws and regulations. Those employed by the Federal Government may work as Internal Revenue Service agents or in financial management, financial institution examination, or budget analysis and administration.

Internal auditors verify the effectiveness of their organization's internal controls and check for mismanagement, waste, or fraud. They examine and evaluate their firms' financial and information systems, management procedures, and internal controls to ensure that records are accurate and controls are adequate. They also review company operations, evaluating their efficiency, effectiveness, and compliance with corporate policies and government regulations. Because computer systems commonly automate transactions and make information readily available, internal auditors may also help management evaluate the effectiveness of their controls based on real-time data, rather than personal observation. They may recommend and review controls for their organization's computer systems, to ensure their reliability and integrity of the data. Internal auditors may also have specialty titles, such as information technology auditors, environmental auditors, and compliance auditors.

Technology is rapidly changing the nature of the work of most accountants and auditors. With the aid of special software packages, accountants summarize transactions in the standard formats of financial records and organize data in special formats employed in financial analysis. These accounting packages greatly reduce the tedious work associated with data management and recordkeeping. Computers enable accountants and auditors to be more mobile and to use their clients' computer systems to extract information from databases and the Internet. As a result, a growing number of accountants and auditors with extensive computer skills specialize in correcting problems with software or in developing software to meet unique data management and analytical needs. Accountants also are beginning to perform more technical duties, such as implementing, controlling, and auditing computer systems and networks and developing technology plans.

Work environment. Most accountants and auditors work in a typical office setting. Some may be able to do part of their work at home. Accountants and auditors employed by public accounting firms, government agencies, and organizations with multiple locations may travel frequently to perform audits at branches, clients' places of business, or government facilities.

Almost half of all accountants and auditors worked a standard 40-hour week in 2008, but many worked longer hours, particularly if they are self-employed and have numerous clients. Tax specialists often work long hours during the tax season.

Accountants and auditors analyze and interpret financial information.

For More: http://www.bls.gov/oco/ocos001.htm

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