Why should accounting be your profession of choice? When I made the decision it's one that never changed. It started with taxes then lead to financial and banking support which now leads me to an even broader window of teaching and fulfillment. Now, why should you join me and many others on this journey?
Perhaps the American Institute of Certified Public Accountants (AICPA) summarized it best in its newly issued pamphlet: "Accounting: The One Degree with 360 Degrees of Possibilities": "You may already have an idea about what you want to do for a career. Then again, maybe you're not so sure. Either way, there's one degree that gives you the education to succeed at just about anything in the business world. It's an accounting degree. Accounting opens doors in every kind of business coast to coast. It can give you the foundation you need to go on and become a CPA. It can prepare you to become a partner in an accounting firm, to pursue a career in finance or corporate management, to work in government, or even to become an entrepreneur. In fact, no matter what you decide to do, having an accounting background can open doors wide."
Accounting is a profession for those interested in math, business and who also have the skills to think outside of the box. An accounting degree can open up many opportunities in varies industries with rewarding compensation.
USA Today has done most of the work for our young professionals by listing the "Top 10 colleges for an accounting degree". Check it out to see if your college selection made that list. If you're an entrepreneur seeking to strengthen this area of your business, visit our webpage for a free consultation. We look forward to hearing from you.
The Accounting profession rules!
. “High expectations are the key to everything.” – Sam Walton, founder Walmart
Analysis is a KeY Tool to Pointing Out A Financial Issue
Beyond the belief of many business owners who hire employees with 20+ years of experience, not all professionals are skilled to analyze data without management direction. The skill of analytics has been identified as beyond necessary as well as critical to the compliance and financial position of an organization. The analysis of financial data employs various techniques to emphasize the comparative and relative importance of the data presented and to evaluate the position of the firm. These techniques include ratio analysis, common-size analysis, review of descriptive material and comparison of results with other types of data. The information derived from these types of analysis should be blended to determine the overall financial position.
The American Management Association research has shown that analytics are important today and will be even more important in the future."Overall, 58% of company leaders say analytics are important to their organizations now, and 82% say they will be important in five years. Less than 1% of companies say analytics will not be important to their business in five years, an unambiguous indication that analytics will be a ubiquitous part of the business world by the end of the decade." Business owners must remember that financial statement analysis is a judgmental process. One of the primary objectives is identification of major changes (turning points) in trends, amounts, and relationships and investigation of the reasons underlying those changes. Often, a turning point may signal an early warning of a significant shift in the future success or failure of the business. Knowing this, ignites the importance of establishing extensive policies and procedures for staff professional development and process improvements.
It's a fact that absolute figures or ratios appear meaningless unless compared to other figures or ratios. Having 60% of total assets composed of buildings and equipment would be normal for some companies but disastrous for others. One must have a guide to determine the meaning of the ratios and other measures. One type is trend analysis which studies the financial history of a business for comparison. By looking at the trend of a particular ratio, one sees whether that ratio is falling, rising or remaining relatively constant. The factors help detect problems or observe good management.
A great example of the month to month financial comparison analysis is provided below by Illinois Small Business Development Center.
A businesses ratios are more than just numbers to your investors and banks and should mean the same to a companies professional staff. Take the first step in improving the business culture plus the professional skills and knowledge base of staff which can lead to the prevention of costing companies millions due to preventive errors or non-compliance matters by developing an extensive reference guide tool.
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Embrace what you don’t know, especially in the beginning, because what you don’t know can become your greatest asset. It ensures that you will absolutely be doing things different from everybody else.”
Entrepreneurs, let's consider this scenario. Your business has expanded quicker than you expected and payroll needs to be processed in the next two business days. As the owner and key responsible for the processing of payroll, you have been faced with a proposal deadline that you cannot miss. What do you do without a trained back-up person? Ideally, you will immediately contact Fontenot & Associates Solutions LLC to schedule your FREE consultation to develop an extensive procedure guide to ensure situation never occurs again. Realistically, as the owner you going to work day and night to get both jobs done on time.
The business process should include a section related to "deductions from employee earnings" which outlines which deductions are allowed and the proper way to set those up for processing. The total earning of an employee for a payroll period, including any overtime pay, are called gross pay. From this amount is subtracted one or more deductions to arrive at the net pay. The deductions normally include federal, state, local income taxes, medical insurance, and pension contributions. A key and critical deduction employers are responsible for is income taxes. Employers normally withheld a portion of employee earnings for payment of the employees' federal income tax. Each employee authorizes the amount to be withheld by completing an "Employee's Withholding Allowance Certificate,"called a W-4. This is the form every employee receives when they start a new job with an employer. A blank form that many people may not understand completely what it means and the importance of it - especially our young college graduates and young entrepreneurs.
A question that remains for many employees, is what do the allowances mean and how do allowances work?
A simple answer is: The number of allowances you claim controls how much will be withheld from your paycheck. The more you claim, the less money is withheld; the fewer, the more of your salary is sent off to the IRS. If you are a single (not married) individual with no dependents (no children) your completed W-4 form may be similar to the example below.
The completion of this worksheet shows Carlie will claim "2" exemptions, mainly because the first questions says you can claim "1" if no one else can claim you as a dependent. This is key for college students who have their own job but the parents are still claiming them as an exemption on their tax return because they qualify. Quick note, if your parents can still claim you on their tax return, the first question "A" should be zero.
As an employer, you may also be required to withhold state or city income taxes. The amounts to be withheld are determined on state-by-state and city-by-city bases. Fontenot & Associates Solutions LLC, has the knowledge and skills to develop an extensive guide for employers and their staff to ensure forms such as this are in compliance.
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Don’t limit yourself. Many people limit themselves to what they think they can do. You can go as far as your mind lets you. What you believe, remember, you can achieve.”
Accurate Payroll from Their Employer Is Key
Every time you state what you want or believe, you’re the first to hear it. It’s a message to both you and others about what you think is possible. Don’t put a ceiling on yourself.” - Oprah Winfrey
As a business owner your current and future staff depends on you to process their payroll accurately and timely. Therefore it is important for a business owner to decide if this process will be managed internally or externally by a third party. Even if the vast majority of your payroll process in issuing 1099s, their must be a process outlined and defined. In the world of Accounting, payroll refers to the amount paid to employees for services they provided during the period.
A company's payroll is important for the following reasons:
Just think? Salary usually refers to payment for managerial and administrative services. Salary is normally expressed in terms of a month or a year. Wages usually refers to payment for employee manual labor. The rate of wages is normally stated on an hourly or a weekly basis. The salary or wage of an employee may be increased by bonuses, commissions, profit sharing or cost-of-living adjustments.
To illustrate computing an employee's earnings, assume Karen Douglas is a office manager employed by Fontenot & Associates Solutions LLC. Karen's regular rate is $55 per hour, and any hours worked in excess of 40 hours per week are paid at 1 1/2 times the regular rate. Karen worked 45 hours for the week ended June 10. Her earnings are as follows:
Earnings at regular rate (40 hrs. X $55) = $2,200
Earnings at overtime rate [ 5 hrs X ($55 X 1 1/2)] = $413
Total earnings $2,613
We all can agree that this is one process that can be straight forward or very complex due to the many factors such as taxes, which makes the matter very serious for all employers. Developing an extensive business guide to support the responsible professionals with monthly deadlines and compliance regulations should be a focus for this weeks goals and significant business accomplish.
Something many business owners must consider when managing their own business is the possibility of extending credit to customers as a method of payment. This would open the door to a variety of customers but it may also harm a small business due to the length of time a receivable remains open. It remains key that owners understand the pros and cons of this choice which includes establishing a firm policy that will protect their business sustainability. In addition, the US small business administration advises,"if your business extends credit to customers, you should become aware of consumer credit laws. The Federal Trade Commission (FTC) enforces the nation’s consumer protection laws. These laws regulate how you advertise interest rates, how much time you have to respond to billing-mistake claims, how aggressive you can be when attempting to collect a debt, and other aspects of extending credit and debt collections."
Business owners and those responsible for the day to day task should understand that the analysis of receivables method is based on the assumption that the longer an account receivable is outstanding, the less likely that it will be collected. Accounts receivable constitute the primary source of incoming cash flow for most businesses, so you should analyze these invoices in aggregate to ascertain the health of the underlying cash flows.
The analysis of receivable method is applies as follows:
Step 1: The due date of each account receivable is determined
Step 2: The number of days each account is past due is determined. This is the number of days between the due date of the account and the date of the analysis.
Step 3: Each account is placed in an aged class according to its days past due which is typically aged as follows:
Step 5: The total for each aged class is multiplied by an estimated percentage of uncollectible accounts for that class
Step 6: The estimated total of uncollectible accounts is determined as the sum of the uncollectible accounts for each ages class.
The preceding steps include summarizing an aging schedule and this overall process is called aging the receivables. An example of a businesses aging report is provided below.
A detailed process such as accounts receivable should be an extensive documented process for any business. This process will ensure cash flow is managed appropriately by those responsible. Fontenot & Associates Solutions LLC can support with the development and analytical process of the monthly accounts receivable, we are just a click away.
A Glimpse Of What Should Be Happening
In every success story, you will find someone who has made a courageous decision. -- Peter F. Drucker
Petty cash funds can be benefit to business of all sizes. The ideal strategy would be to establish clear business goals for those responsible to ensure the account maintains the designated balance, who will have access to the funds and which expenses are deemed as applicable.
The key accounting tips to understand is that the only time Petty Cash is debited is when fund is initially established, as shown below , or when the fund is being increased.
July 1 Petty Cash $500
In addition, the only time Petty Cash is credited is when the fund is being decreased for use of expenses. The most common expenses may be postage, office supplies or minor repairs. It's appropriate to give two persons within the company access to the petty cash account. One person should have access to replenishing the funds as outlined in the business procedures along with the responsible journal entries.
Accounting Scenario example:
The amount of cash in the petty cash fund is $120. Issued a check to replenish the fund, based on the following summary of petty cash receipts: office supplies, $300, and miscellaneous administrative expense, $75. Any missing funds should be recorded in the cash short and over account.
Office Supplies 300
Miscellaneous Administrative Expense 75
Cash Short and Over 5
Whether your small business is a one-person, home based business or a large corporation, Fontenot & Associates Solutions LLC can support with establishing the essential detailed policies and procedures for the accounting and operations team.
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Keeping up with small day to day expenses can become overwhelming for a small business owner. A company often has to pay small amounts for such items as postage, office supplies, or minor repairs. Although small, such payments may occur often enough to total a significant amount. Writing a check for such small amounts in not practical and using your bank card could cause you bank balance to reduce to an unexpected amount and important payments may go unpaid. Thus, instead, a business owner may choose to maintain a special cash fund, called a petty cash fund.
Generally, a petty cash fund is established by estimating the amount of payments needed from the fund during a period, such as a week or a month. A check is then written and cashed for this amount. To ensure this special account is managed on a daily basis, business owners will choose a responsible team member to disburse money from the fund as needed. For control purposes, the company may place restrictions on the maximum amount and the types of payments that can be made from the fund. Each time money is paid from petty cash, the responsible team member, records the details on a petty cash receipts form.
The petty cash fund is normally replenished at periodic intervals, when it is depleted, or reaches a minimum amount. To illustrate, assume a petty cash fund of $500 is established on June 1.
June 1 Petty Cash 500
A key thing to remember is that the only time Petty Cash is debited is when the fund is initially established, as shown in the preceding entry, or when the fund is increased.
To support with the control of the petty cash account a business owner should establish clear business goals with the development of an extensive guide. This guide will outline the purpose of a petty cash account, applicable expenses the funds should be disbursed for and how often. An established guide would be a great reference tool.
If you need support with reconciling your petty cash account -- we are just a click away. It's never to late to get started, click here to schedule your FREE consultation.
Try, try, try, and keep on trying is the rule that must be followed to become an expert in anything. – W. Clement Stone
The income statement reports a corporation's net income for the period of time indicated in its heading. The income statement is also known as the statement of income, statement of earnings, statement of operations, profit and loss statement, or P&L.
The historical cost principle means that most of the amounts shown on the income statement reflect a corporation's vast number of actual transactions that were recorded by the accounting system. In addition the income statement will include some adjusting entry amounts entered by the accountant in order to comply with the accrual method of accounting.
Revenues are the amounts earned by a corporation through its main activities such as:
Continue to educate yourself about the accounting profession and how it relates to your business and it's growth. Fontenot & Associates Solutions LLC supports companies with training of new staff and the accounting basics.
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Exploration may be carried out either prior to or after mineral leases are acquired. In most cases, if exploration is to be conducted before a lease is obtained, an exploration permit, commonly called shooting rights, must be obtained from the property owner. If offshore exploration is involved, a permit that does not usually require the payment of a fee must be obtained, normally from the U.S. Department of Interiors Minerals Management Service (MMS) now ONRR. In either offshore or onshore activities, permission is required to conduct exploration.
Onshore exploration rights may take one of two forms. Under a shooting rights only contract, the rights holder is allowed to enter onto the property and conduct exploratory activities, up to but not including the drilling of an exploratory well.
The entry to record would be similar to the entry below:
Work in Progress -- Shooting rights & damages 2,300
Vouchers Payable 2,300
The comprehension of accounting expectations in accounting remains a key tool to the oil and gas industry. Extensive documentation supports the operations team with their day to day and monthly deadlines and provide additional assurance of journal entries being recorded properly.
Some of the main features of an exploration permit can be reviewed here.
Success is getting what you want. Happiness is wanting what you get. – Dale Carnegie.
We are all guilty of the enjoyment of having lunch with a co-worker or a family night out at one of our favorite restaurants. But, what would you say contributes to the enjoyment of your experience? Yes, the restaurant must have remarkable food that we choose to indulge in more than once a week but it also gets your repeat service because of the staff and waiters.
When choosing to become an entrepreneur from the ground up or via a franchise investment requires a great deal of planning. One key section of the business plan is staffing. This section should list the staff positions, the number of people needed for each position and the average rate of pay for the position. List any recruiting plans or services you will use to hire your staff. Describe the hiring standards and interview process that will be used. This should not be an intensive project for the business owner, third party support is available by companies such as Fontenot & Associates Solutions LLC. The companies commitment is to understand the culture, attitude and environment a business is trying to develop. Understanding these statistics helps with the recruiting process and creating the business framework.
Success should be available to all professionals, right? Of course, this is why Fontenot & Associates Solutions LLC created the newsletter below to give light to the difference a waiter or waitresses makes to a customers experience everyday and to stress the importance of having detailed procedures to set them up for success, starting from day one.
It's never to late. Set your team up for success here!
My mission is to offer the best accounting and operations solutions and tips for entrepreneurs and small to mid-size companies worldwide seeking to close their process gaps with actual solutions.