What is the Invoice entry for Accounts receivable?

Invoice entry for Accounts Receivable refers to the process of recording a transaction in a company’s financial records when it issues an invoice to a customer for goods or services provided. This entry typically includes details such as the invoice number, date, description of the goods or services, quantity, unit price, and total amount owed by the customer. It is an essential step in the Accounts Receivable cycle, as it establishes a legal claim for payment from the customer and helps track the company’s outstanding receivables. Once the invoice entry is made, it serves as a basis for monitoring the payment status, sending reminders, and eventually recognizing revenue upon receipt of payment.

What is Bill entry for Accounts Payable?

Bill entry for Accounts Payable refers to the process of recording a transaction in a company’s financial records when it receives a bill or invoice from a supplier for goods or services provided. This entry typically includes details such as the bill number, date, description of the goods or services, quantity, unit price, and total amount owed to the supplier. It is a crucial step in the Accounts Payable cycle, as it establishes a liability for payment to the supplier and helps track the company’s outstanding payables. Once the bill entry is made, it serves as a basis for managing cash flow, scheduling payments, and maintaining good relationships with suppliers. The timely and accurate recording of bills is essential for ensuring that the company meets its financial obligations in a responsible and organized manner.

What is bank and credit card reconciliation?

Bank Reconciliation:

Bank reconciliation is the process of comparing a company’s internal financial records, including its cash account, with the information provided by the bank in its statement. The objective is to ensure that the company’s records accurately reflect its financial transactions and that any discrepancies between the two sets of records are identified and rectified. This process helps in verifying the accuracy of cash balances, detecting errors, uncovering fraud, and ensuring the completeness of financial data.

Credit Card Reconciliation:

Credit card reconciliation involves the comparison of a company’s internal financial records, particularly its credit card transactions, with the statement provided by the credit card company. The purpose is to confirm that all credit card transactions have been accurately recorded, and any discrepancies between the company’s records and the credit card statement are investigated and adjusted as necessary. This process ensures that all credit card-related financial activities are properly accounted for, contributing to the overall accuracy and integrity of the company’s financial statements.

What is payroll tax reporting?

Payroll tax reporting refers to the process of calculating, preparing, and submitting various tax-related documents and payments to governmental agencies. It involves the accurate reporting and remittance of taxes withheld from employees’ wages, as well as the employer’s contributions to government-sponsored programs like Social Security, Medicare, and unemployment insurance. This process ensures compliance with tax laws and regulations, and it typically includes the preparation of forms such as W-2s for employees and various tax forms for government authorities. Payroll tax reporting is a crucial aspect of a company’s financial and legal responsibilities and requires precision to avoid penalties or legal issues.

What is Employee Onboarding?

Employee onboarding is the process through which a new employee is introduced to their role, the company, its culture, and the broader work environment. It encompasses a series of activities and orientations designed to help new hires integrate smoothly into their new positions and become productive members of the organization.

What are collection calls?

Collection calls refer to the practice of contacting individuals or businesses who owe money to a creditor or a collection agency to recover the outstanding debt. These calls are made by representatives of the creditor or collection agency and are aimed at reminding, persuading, or negotiating with the debtor to fulfill their financial obligation.

During collection calls, the collector typically seeks to:

• Verify Debts: Confirm that the debtor acknowledges the debt and understands the amount owed.
• Negotiate Repayment Plans: Discuss potential arrangements for repaying the debt, which could include lump-sum payments, installment plans, or settlements for a reduced amount.
• Provide Information: Offer detailed information about the debt, including its origin, outstanding balance, and any associated fees or interest.
• Address Disputes: If the debtor contests the validity or accuracy of the debt, the collector may investigate and address any potential discrepancies.

What is 1099 Vendor reporting?

1099 Vendor reporting refers to the process of providing tax-related information to the Internal Revenue Service (IRS) about payments made to non-employee service providers, often referred to as vendors. This reporting is done using Form 1099, which is a series of tax documents used to report various types of income other than salaries or wages.

Key elements of 1099 Vendor reporting include:

• Identification of Vendors: The payer (usually a business or individual) must identify which vendors qualify for 1099 reporting. This typically includes individuals or unincorporated businesses that have provided services, but not employees.
• Accurate Recording of Payments: The payer must keep accurate records of all payments made to vendors throughout the year, especially those that exceed the $600 threshold.
• Filling Out the 1099 Form: At the end of the tax year, the payer is responsible for completing and filing the Form 1099-NEC for each applicable vendor. This form includes details such as the vendor’s name, address, tax identification number (or Social Security number), and the total amount paid.
• Providing Copies to Vendors: A copy of the 1099-NEC must be provided to each vendor listed on the form. This allows them to report the income on their own tax returns.
• Filing with the IRS: The payer is also required to submit a copy of the 1099-NEC to the IRS by the specified deadline, which is typically around the end of January or early February.

The purpose of 1099 Vendor reporting is to ensure that income earned by vendors is properly reported to the IRS, allowing for accurate taxation. Additionally, it helps the IRS match the income reported by vendors on their tax returns with the income reported by payers on their own tax returns. Failure to comply with 1099 reporting requirements can result in penalties.

What of Project job costing?

Project job costing is a method used by businesses to track and allocate costs associated with specific projects or jobs. It involves the detailed accounting and analysis of expenses incurred in the execution of a particular project, allowing businesses to accurately determine the profitability and efficiency of individual endeavors.

Project job costing provides businesses with valuable insights into the financial performance of individual projects. It allows for better cost management, accurate pricing strategies for future projects, and helps in identifying areas where efficiencies can be improved. Additionally, it aids in ensuring that projects are completed within budgetary constraints, contributing to overall business profitability and success.

 What is Payroll Processing?

Payroll processing is the systematic and administrative task of calculating and distributing employee compensation, including wages, salaries, bonuses, and deductions. It involves various steps to ensure that employees receive their rightful earnings accurately and on time. This process typically includes the following key activities:

• Timekeeping and Attendance Tracking: Recording the hours worked by employees, which may involve using time clocks, time sheets, or electronic timekeeping systems.
• Calculating Earnings: Determining the gross pay for each employee based on their hourly rate, salary, or commission, as well as any overtime, bonuses, or other forms of compensation.
• Deductions and Withholdings: Calculating and deducting taxes (such as federal, state, and local income taxes), Social Security, Medicare, and any other authorized deductions like retirement contributions, health insurance premiums, and wage garnishments.
• Benefits Administration: Managing employee benefits, including health insurance, retirement plans, and other voluntary deductions.
• Accruals and Time Off: Tracking and managing accrued paid time off, such as vacation days, sick leave, and other leave policies.
• Compliance with Labor Laws and Regulations: Ensuring that payroll processes adhere to federal, state, and local labor laws, tax regulations, and wage and hour requirements.
• Payroll Tax Reporting and Filing: Accurately reporting and remitting payroll taxes to government agencies, including the filing of tax forms such as W-2s and 941s in the United States.
• Issuing Paychecks or Direct Deposits: Preparing and distributing employee paychecks or facilitating direct deposits to their designated bank accounts.
• Recordkeeping: Maintaining detailed records of payroll transactions, including earnings, deductions, and tax withholdings. This information may be needed for audits, compliance, and financial reporting.
• Employee Self-Service: Providing employees with access to their pay stubs, tax forms, and other relevant payroll information through self-service portals.
• Year-End Processing: Handling year-end tasks such as generating W-2 forms for employees and filing necessary tax documents with government agencies.

Accurate and timely payroll processing is crucial for maintaining employee morale, ensuring legal compliance, and upholding the financial integrity of a business. Additionally, it plays a key role in attracting and retaining quality employees, as reliable and accurate payroll operations contribute to a positive work environment.

 What is Sales Use tax reporting?

Sales and use tax reporting involves the process of tracking, calculating, and remitting taxes on goods or services sold by a business. This process ensures compliance with state and local tax regulations and helps businesses meet their legal obligations.

Sales and use tax reporting is a critical aspect of a business’s financial operations. It helps ensure that the appropriate taxes are collected and remitted, contributing to the funding of essential public services in the jurisdictions where the business operates.

Balance Sheet Terms

The Balance Sheet is one of the two most common financial statements produced by accountants. This section pertains to potentially confusing basic accounting terms that relate to the balance sheet.

Accounts Payable (AP)

Accounts Payable include all of the expenses that a business has incurred but has not yet paid. This account is recorded as a liability on the Balance Sheet as it is a debt owed by the company.

Accounts Receivable (AR)

Accounts Receivable include all of the revenue (sales) that a company has provided but has not yet collected payment on. This account is on the Balance Sheet, recorded as an asset that will likely convert to cash in the short-term.

Accrued Expense 

An expense that been incurred but hasn’t been paid is described by the term Accrued Expense.

Asset (A)

Anything the company owns that has monetary value. These are listed in order of liquidity, from cash (the most liquid) to land (least liquid).

Balance Sheet (BS)

A financial statement that reports on all of a company’s assets, liabilities, and equity. As suggested by its name, a balance sheet abides by the equation <Assets = Liabilities + Equity>.

Book Value (BV) 

As an asset is depreciated, it loses value. The Book Value shows the original value of an Asset, less any accumulated Depreciation.

Equity (E) 

Equity denotes the value left over after liabilities have been removed. Recall the equation Assets = Liabilities + Equity. If you take your Assets and subtract your Liabilities, you are left with Equity, which is the portion of the company that is owned by the investors and owners.

Inventory 

Inventory is the term used to classify the assets that a company has purchased to sell to its customers that remain unsold. As these items are sold to customers, the inventory account will lower.

Liability (L) 

All debts that a company has yet to pay are referred to as Liabilities. Common liabilities include Accounts Payable, Payroll, and Loans.

Income Statement Terms

The Income Statement AKA Profit and Loss Statement is the second of the two common financial statements. These are the most common basic accounting terms used in reference with this reporting tool.

Cost of Goods Sold (COGS) 

Cost of Goods Sold are the expenses that directly relate to the creation of a product or service. Not included in this category are those costs that are needed to run the business. An example of COGS would be the cost of Materials, or the Direct Labor to provide a service.

Depreciation (Dep)

Depreciation is the term that accounts for the loss of value in an asset over time. Generally, an asset has to have substantial value in order to warrant depreciating it. Common assets to be depreciated are automobiles and equipment. Depreciation appears on the Income Statement as an expense and is often categorized as a “Non-Cash Expense” since it doesn’t have a direct impact on a company’s cash position.

Expense (Cost)

An Expense is any cost incurred by the business.

Gross Margin (GM)

Gross Margin is a percentage calculated by taking Gross Profit and dividing by Revenue for the same period. It represents the profitability of a company after deducting the Cost of Goods Sold.

Gross Profit (GP)

Gross Profit indicates the profitability of a company in dollars, without taking overhead expenses into account. It is calculated by subtracting the Cost of Goods Sold from Revenue for the same period.

Income Statement (Profit and Loss) (IS or P&L)

The Income Statement (often referred to as a Profit and Loss, or P&L) is the financial statement that shows the revenues, expenses, and profits over a given time period. Revenue earned is shown at the top of the report and various costs (expenses) are subtracted from it until all costs are accounted for; the result being Net Income.

Net Income (NI)

Net Income is the dollar amount that is earned in profits. It is calculated by taking Revenue and subtracting all of the Expenses in a given period, including COGS, Overhead, Depreciation, and Taxes.

Net Margin

Net Margin is the percent amount that illustrates the profit of a company in relation to its Revenue. It is calculated by taking Net Income and dividing it by Revenue for a given period.

Revenue (Sales) (Rev)

Revenue is any money earned by the business.

General Terms

Of course, there are those basic accounting terms that don’t pertain to a particular financial statement. For those, we’ve reserved the “general” category.

Accounting Period

An Accounting Period is designated in all Financial Statements (Income Statement, Balance Sheet, and Statement of Cash Flows). The period communicates the span of time that is reported in the statements.

Allocation

The term Allocation describes the procedure of assigning funds to various accounts or periods. For example, a cost can be Allocated over multiple months (like in the case of insurance) or Allocated over multiple departments (as is often done with administrative costs for companies with multiple divisions).

Business (or Legal) Entity

This is the legal structure, or type, of a business. Common company formations include Sole Proprietor, Partnership, Limited Liability Corp (LLC), S-Corp and C-Corp. Each entity has a unique set of requirements, laws, and tax implications.

Cash Flow (CF)

Cash Flow is the term that describes the inflow and outflow of cash in a business. The Net Cash Flow for a period of time is found by taking the Beginning Cash Balance and subtracting the Ending Cash Balance. A positive number indicates that more cash flowed into the business than out, where a negative number indicates the opposite.

Certified Public Accountant (CPA)

CPA is a professional designation that an accountant can earn by passing the CPA exam and fulfilling the requirements for both education and work experience, which vary by state.

Credit

A credit is an increase in a liability or equity account, or a decrease in an asset or expense account.

Debit

A debit is an increase in an asset or expense account, or a decrease in a liability or equity account.

Diversification

Diversification is a method of reducing risk. The goal is to allocate capital across a multitude of assets so that the performance of any one asset doesn’t dictate the performance of the total.

Enrolled Agent (EA)

An Enrolled Agent is a professional accounting designation assigned to professionals who have successfully passed tests showcasing expertise in business and personal taxes. Enrolled Agents are generally sought out to complete business tax filings to ensure compliance with the IRS.

Fixed Cost (FC)

A Fixed Cost is one that does not change with the volume of sales. For example, rent and salaries won’t change if a company sells more. The opposite of a Fixed Cost is a Variable Cost.

General Ledger (GL)

A General Ledger is the complete record of a company’s financial transactions. The GL is used in order to prepare all of the Financial Statements.

Generally Accepted Accounting Principles (GAAP)

These are the rules that all accountants abide by when performing the act of accounting. These general rules were established so that it is easier to compare ‘apples to apples’ when looking at a business’s financial reports.

Interest

Interest is the amount paid on a loan or line of credit that exceeds the repayment of the principal balance.

Journal Entry (JE)

Journal Entries are how updates and changes are made to a company’s books. Every Journal Entry must consist of a unique identifier (to record the entry), a date, a debit/credit, an amount, and an account code (that determines which account is altered).

Liquidity

A term referencing how quickly something can be converted into cash. For example, stocks are more liquid than a house since you can sell stocks (turning it into cash) more quickly than real estate.

Material

Material is the term that refers whether information influences decisions. For example, if a company has revenue in the millions of dollars, an amount of $0.50 is hardly material. GAAP requires that all Material considerations must be disclosed.

On Credit/On Account

A purchase that happens On Credit or On Account is a purchase that will be paid at a future time, but the buyer gets to enjoy the benefit of that purchase immediately. “Bartender, put it on my tab…”

Overhead

Overhead are those Expenses that relate to running the business. They do not include Expenses that make the product or deliver the service. For example, Overhead often includes Rent, and Executive Salaries.

Payroll

Payroll is the account that shows payments to employee salaries, wages, bonuses, and deductions. Often this will appear on the Balance Sheet as a Liability that the company owes if there is accrued vacation pay or any unpaid wages.

Present Value (PV)

Present Value is a term that refers to the value of an Asset today, as opposed to a different point in time. It is based on the theory that cash today is more valuable than cash tomorrow, due to the concept of inflation.

 Receipts

A Receipt is a document that proves payment was made. A business produces receipts when it provides its product or service, and it receives receipts when it pays for goods and services from other businesses. Received Receipts should be saved and catalogued so that a company can prove that its incurred expenses are accurate.

Return on Investment (ROI)

Originally, this term referred to the profit that a company was making (Return), divided by the Investment required. Today, the term is used more loosely to include returns on various projects and objectives. For example, if a company spent $1,000 on marketing, which produced $2,000 in profit, the company could state that it’s ROI on marketing spend is 50%.

Trial Balance (TB)

Trial Balance is a listing of all accounts in the General Ledger with their balance amount (either debit or credit). The total debits must equal the total credits, hence the balance.

Variable Cost (VC)

These are costs that change with the volume of sales and are the opposite of Fixed Costs. Variable costs increase with more sales because they are an expense that is incurred in order to deliver the sale. For example, if a company produces a product and sells more of that product, they will require more raw materials in order to meet the increase in demand.