What are they?Did you know, U.S companies follow one of two methods of financial accounting for petroleum E&P activities: successful efforts or full cost? The successful efforts methods has only the cost of successful efforts capitalized as oil and gas properties. Cost of explanatory dry holes, geological and geophysical (G&G) cost in general, delay rentals, and other property carry costs are expensed. Under the full cost method all property acquisitions, exploration, and development cost, even dry hole costs are capitalized as oil and gas properties. These cost represent fixed assets, amortized on a country-by-country basis using a unit-of-production method based on volumes produced and remaining proved reserves. If a company drills five exploratory wells for $1 million each and only one finds proved reserves, the successful efforts methods recognizes a $1 million asset, whereas the full cost method would recognize a $5 million asset. Continue to follow our blog as we share more about the oil and gas industry process and accounting responsibilities. You can also visit our website for support in establishing policies and procedures for your business. Source: Petroleum Accounting
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Source: AccountingCoach
Do You Have Employees?Making the decision to hire employees should not be an overnight thought. The process of hiring an employee is not just about deciding the day to day responsibilities of that person it also includes understanding the additional expenses to account for and reporting requirements as an employer. Wages expense is the hourly compensation cost incurred by a business for its hourly workers. This can be one of the largest expenses incurred by a business, especially in the services and production industries where there are many hourly employees. The amount recognized as wages expense in an organization's income statement varies, depending on whether it uses the accrual basis or cash basis of accounting. Under the accrual basis, the amount of wages expense recognized is the amount earned by workers during the reporting period. Under the cash basis, the amount of wages expense recognized is the amount paid to workers during the reporting period. Did you know? Salaries and wages paid to employees of your small business are tax-deductible expenses. However, other items also qualify under the salary and wage category with regard to employee wages. A partial list includes sick leave, vacation pay, bonuses, education expenses, and reimbursements for employee business expenses. These are also tax-deductible.A full list and explanation of each can be found in IRS Publication 334. Source: AccountingCoach; BizFinance Problems are not stop signs, they are guidelines." -Robert H. Schuller How Does Your Business Control it?Petty cash is a small amount of cash that is kept on the premises of a business in order to make incidental cash purchases and reimbursements, such as for delivered meals. Petty cash can mitigate the effects of the more cumbersome accounts payable process. The essential petty cash process is to authorize the payment of a certain amount of cash (such as $300 in bills and coins) into a petty cash fund, which is then controlled by a petty cash custodian, such as the office manager. The petty cash custodian pays out cash as requested in exchange for some form of evidence, such as a receipt or a voucher. The aggregate total of all remaining bills, coins, and evidence of receipt in the petty cash fund should always match the authorized amount of cash for that fund. Once the amount of bills and coins in the fund runs low, the custodian takes the receipts and vouchers to the accounting department and swaps them for a replacement amount of bills and coins. This cash replacement brings the total amount of cash in the fund back up to the originally authorized amount of cash. The mishandling of petty cash could paint the wrong picture for management as they review and forecast revenue for the business. The Houston Chronicle published an article providing 5 steps on "How to Keep Track of Petty Cash", review article and share with a colleague. Source: AccountingTools
Take-home pay is the amount of cash that an employee is paid after all payroll taxes and other deductions are removed from the person’s gross pay. This residual amount of cash is what an employee has available for spending or investment purposes. The deductions that can be taken from gross pay to arrive at take-home pay include (but are not limited to) the following:
Source:AccountingTools
Success is not final, failure is not fatal: it is the courage to continue that counts." - Winston Churchill
Source: AccountingTools
Forensic Accounting uses accounting, auditing, and investigative skills to conduct investigations into theft and fraud. It is listed among the top 20 career paths of the future. The job of forensic accountants is to catch the perpetrators of the estimated $600 billion per year of theft and fraud occurring at U.S. companies. This includes tracing money-laundering and identity-theft activities as well as tax evasion. Insurance companies hire forensic accountants to detect insurance frauds such as arson, and law offices employ forensic accountants to identify martial assets in divorces. Forensic accountants often have FBI, IRS or similar government experience. Source: Financial and Managerial Accounting
What do Investors want to know?Net earnings figures in the operating activities information is hard to dispute; either the business was profitable, or it was not. The Income Statement is intended to help investors accomplish the following objectives:
The period of time that the statement covers is chosen by the business and will vary. For example, the heading may state: "For the Three Months Ended December 31,2015" (The period of October 1 through December 31, 2015.) "The Four Weeks Ended December 27, 2015." (The period of November 29 through December 27, 2015.) "The Fiscal Year Ended June 30, 2015" (The period of July 1, 2014 through June 30, 2015.) Keep in mind that the income statement shows revenues, expenses, gains, and losses; it does not show cash receipts (money you receive) nor cash disbursements (money you pay out). Source: Accounting Coach; Money Instructor
ACAP (Accounting Career Awareness Program) is Taking ApplicationsAccounting Career Awareness Program (ACAP) primary objective is to increase the understanding of accounting and business career opportunities among high school students from underrepresented ethnic groups. This program is a one-week residency program for high school students held at a local college or university. I personally have had the opportunity to speak to young students and share my life and professional experience with them. Students are able to see first hand what the accounting and business profession could mean for them. The program now is in more than fifteen cities across the country.
Help the program by sharing this information. LinkedIn has an article posted about the ACAP program also.
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