Acounting Archive

Peter Robertson asked:




Different methods of allocating costs

First, we will start with Direct Costs. In the previous article I indicated that it is advisable to allocate direct or (known) costs to the product or service whenever possible.

There are a number of methods used. The most common one being used by service type industries such as the local mechanic:-

DIRECT COSTS

Job Costing

For some, this takes the form of a docket book in which they write down each expense relative to the job being undertaken. In larger workshops and small factories there is often a job sheet or card that follows the product along the assembly line. These can be specially printed, or with many of the Small to Medium Enterprises (SME) the accounting package used may print one.

On jobs that extend over a longer period if these cards are collected and entered into the accounting program then the value of Work in Progress for each job may be obtained. It is also possible to see how actual costs compare with those in the quotation.

One of these expenses is of course Workshop Labour. Few firms are ever able to track each employee’s direct labour cost as the employee often is shifted from one job to another too frequently for this to be practicable. The clerical cost of this recording of labour is also prohibitive.

Once a firm has been able to establish a cost history for labour the most sensible way of allocating this is to establish how many different categories of employee are on the payroll. That is, an average cost may be established for a supervisor, another average cost for leading hands, another for permament tradesmen and yet another for casual employees. With apprentices, there may be different average rates based on years of training.

All these labour rates should take into account not only gross wages paid, but also such extra costs as employer superannuation contribution, WorkCover levy, any regular tool or car allowances, and any salary sacrifice costs that affect the employer.

Process or Batch Costing.

The theory here is not much different to Job Costing except that instead of the costs being allocated to a specific job to be charged out, they are being allocated to a production run of some product. The end result is that an average cost can be established for one of a number of products being processed at one time.

Standard Costs

These are established by larger firms such as automotive manufacturers. When a production run is scheduled the costs are accumulated at standard contract rates as soon as Purchase Orders are issued. A detailed analysis is subsequently undertaken of the costs of over or under supply of materials and labour. Even the costs of wear and tear of plant are charged against the run based on standard machine hours that should occur.
I consider that it is unlikely that any SME would need to consider seven variable Standard Cost reporting.

INDIRECT COSTS

These are usually associated with the cost of running the front office, sales team costs, advertising and any other cost that can not be reasonably allocated direct to the Job or Process Cost.

As mentioned in the previous article all costs have to be recovered, and provision made for replacement of plant (as distinct from depreciation of historic cost by the Tax Agent), and of course a profit for the investors. The most usual method of applying these indirect or on-costs is as a percentage to be added to the Direct or known costs.

Modern accounting software for SME provides for Plussage to be added to purchase cost e.g. in MoneyWorks Gold, and when the selling price is shown, the percentage mark-up can be set to also show on the screen. This then enables the salesperson to know how much they can safely reduce the price if bargaining is practiced.

A future article will deal with the concepts of budget setting in more detail.

Caffeinated Content – Members-Only Content for WordPress

David Kraft asked:




Working with the wrong accounting software is a game of give and take in most companies. Sometimes the company has to alter processes to accommodate the software’s settings and at other times the company is able to customize the software to work in line with existing processes.

The trick to avoiding this game is to select the right software from the start. The result of selecting and implementing the right software in the beginning is a more automated and streamlined business that can avoid the back and forth game of adjusting processes to work with the software and vice versa. Accounting software available today comes with a number of modules that can be helpful, and if the right modules are selected, a company will gain almost immediate benefits from the new software. Some of the more common modules are:

General Ledger – The foundation of financial software, a general ledger allows users to interface with all functions of the software package. It will keep a record of all transactions, budgets, and other financials. The general ledger imports data from other modules and displays it in an easier to read format. When selecting software with general ledger capabilities, be aware of what reports you need easy access to and look for the best solution.

Sales Order Entry – A sales order entry module allows companies to store and access all of their sales orders in one place. All aspects of processing an order is put in to the system and everything from the shipping address to the available inventory is accessible. To gain the most functionality from a sales order module, it needs to be integrated with other modules, such as inventory management.

When properly configured, a sales order module allows users to complete all steps of the order process in one place. It should also be capable of tracking packages while they are en route to customers using tracking numbers.

Inventory Control – This module is relatively self-explanatory – it allows users to manage the inventory of products through the software. It is usually integrated with sales and purchase order processing modules and is capable of generating reports about inventory supply, sales, customers, accounts, inventory value, and so on.

Job Cost – This module is capable of tracking costs related to jobs and projects in certain industries, such as construction. The main function of job cost modules is to track the cost to date of a project or job and be able to analyze that cost in relation to hours, percent of budget, and so on.

When used properly, job cost modules can provide companies with beneficial information about how profitable jobs that the organization completes are. This module can be used as both a tracking and estimating software and is capable of tracking previous job costs and using real, historical data to estimate costs for similar jobs.

Purchase Order – Purchase order modules handle ordering new products from suppliers. This item tracks what supplies are in stock, how long they will remain in stock, when new supplies need to be ordered, and how much needs to be ordered. A well-integrated purchase order module will track purchase orders from their initial creation to arrival of the new supplies, however some companies do not operate a level to make this much functionality worth the additional money.

Website content

Kevin Meaney asked:




Accounting deals with summarizing, analyzing and reporting the financial data and information about a business. Accounting software is an application which runs on a computer that records and processes accounting transactions of a business. Financial statements, profit and loss account, payroll, trial balance, accounts payable and receivables can be made easily with the help of this application. It increases the effectiveness and efficiency of the firms and business even over the several decades back.

Accounting software is nothing but a program that has to be installed in the computer or laptop used in business or at home. Nowadays this application is used in all the fields to mange accounts properly and for future aspect as company finances are important for the business so there is a need of a tool that can easily mange accounts and saves lots of time. Earlier all the information is stored in paper so it becomes very difficult to manage them or to obtain information that was previously written. Such tools can handle these tasks easily and only a single person is required to make the entries.

There are different types of accounts software available some of them are financial and personal accounting software, business accounting, tax accounting, mid market and fund accounts software etc. at different prices. These computer applications are used to keep the track of the day-to-day operations of the business and also maintains the track of all the customers and vendors. With the help of this computer program, you can directly connect to the bank account which makes your end of month and year reconciliations much easier.

On the whole accounts software is a program that is used to maintain the accounts of the business on computer so that they can be maintained easily and it becomes easy for us to obtain any entry at any point of time without any problem.

accounting software

Charles Cheow asked:




There are all sorts of different types of accounting software available, including that meant for personal use. Even if you don’t have a business or a lot of investments, this software could be useful for you.

These days many people are having trouble making ends meet, and need to get help with budgeting their money in order to make it last a bit longer. Many types of personal accounting software can help you to do this. This means you can budget so that you can pay off loans more quickly, or stop over spending on things that you don’t need, since you will be able to figure out how much you have available to spend for each area.

Most people have to file taxes each year as well. If you keep track of all your financial details using personal accounting software it will be much easier to figure out your taxes. All the information will be in the same place. Some programs that help you to prepare your taxes can even import this information from major personal accounting programs so most of the work will be done for you.

This type of software can help you get a handle on your money and where it is going, which can help you to figure out how to change your spending habits in order to be able to pay off debt faster or start saving money. You will have to enter all your spending and earnings into the software, however, and this can take some time. Some programs will automatically import this data from your bank account and credit card accounts to make things a little bit easier.

You don’t even have to spend a lot of money to get software to help with your accounting needs. There are some inexpensive options available if you don’t need a lot of extra features. You can even find some free types of accounting software available on the internet.

Whatever software you choose, make sure that it isn’t too difficult to learn or to use or you will end up giving up on it and not making full use of it. If you choose well known programs you will most likely be able to find some training materials for free over the internet, or people that you know who use the software and will be willing to help you learn how to take full advantage of it.

accounting software

Kimberlie Waddoups asked:




Many accountants, especially the younger generation, have heard of SaaS by now, and no we’re not talking about Statements on Auditing Standards(SAS)–though they are a delightful topic as well. SaaS stands for Software as a Service and basically means instead of having a physical copy of your software, everything is run through the Internet.

This means that it isn’t absolutely necessary to go to the store and buy Quickbooks, you can actually just use online software that will store all of your information. This somewhat recent technology has advantages and disadvantages over the traditional method.

Advantages

The biggest advantage of accounting SaaS is that you can access your accounting information/software from anywhere in the world and from any computer in the world. Before SaaS, accountants were still able to access their accounting information from anywhere in the world as long as they had their laptops with them. With SaaS, the accountant no longer needs to bring a laptop along, all the accountant needs is access to the Internet from any computer.

You can think of accounting SaaS as being like checking your email. All you have to do is log in and you have complete access to all of your accounting data (pretty unbelievable). You can even use your phone to update/check your accounting system as long as the phone has Internet capabilities.

Another big advantage of accounting SaaS is that someone else is responsible for the upkeep of your data(this is also the biggest weakness, but more about this in a minute). With SaaS the accounting data is hosted by the company providing the software. They are responsible for its integrity and security which can save accounting organizations a lot of headaches and time. Having the information hosted on another server also frees up room on the organization’s personal system.

Weaknesses

Did we mention that someone else is hosting your precious, invaluable data? With accounting SaaS they are, and it can be scary to think that years worth of important invoices, payables, and other ledgers are in someone else’s control. If the company that is hosting your information is not established, they could simply go out of business and with them all of your data.

A simple suggestion is to make sure that you have physical backups of all of the accounting data. You can request these regularly from the companies hosting your accounting data.

Inherent risk of the Internet. Accountants know all about inherent risk and the nature of the Internet can be a little risky. Your data is being stored online and could be stolen or ruined by bored hackers or eager competitors. Set inherent risk to “very high” when using the beloved audit decision making model.

Accounting SaaS is a very valuable tool that offers flexibility that was previously unknown in the accounting world. Deciding whether the benefits of accounting SaaS outweigh the costs is a decision that shouldn’t be taken lightly. We suggest picking up some more work on the way by having your accounting company audit the hosting company to check for proper internal controls (wink, wink).

Create a video blog…instantly.

Matthew Walsh asked:




Cloud accounting software is that which allows users to operate computer programs over an Internet connection. Provided that users have regular and reliable web access, the benefits of this type of browser-based software are numerous as it saves time, money, hard drive space and much more.

Implementing “clouds,” or secure spaces designated for an operation’s data, cloud accounting requires no program installation, making it potentially accessible from any computer. In this highly mobile, fast-paced world, it’s of ever-growing importance that accountants are able to retrieve information without missing a beat, a luxury that cloud accounting affords. Unparalleled by traditional accounting software, the ability of a user to work on the same project in the office, at home or in the airport makes it the most convenient alternative.

More and more technology firms are developing their own cloud accounting solutions every year, which also makes it an increasingly viable option. Most software is available on a subscription or usage basis, meaning that users can try different programs before making any long-term commitments and plunking down a lot of money upfront, as most conventional software requires. In addition, cloud accounting is a low-overhead solution, since program upkeep is often performed by the software’s service provider.

Many cloud programs are customizable and able to fit the individual needs of their users, resulting in peak performance levels. They are also the safest way to store information, requiring unique passwords to access uploaded data and eliminating the risk of losing data since it can be accessed from anywhere. Since cloud software makes use of the Internet and third-party servers, it’s virtually limitless data storage capabilities are unmatched by those programs installed on a system’s hard drive.

As the global marketplace continues its migration to the Internet, it’s clear that cloud accounting software is the most-sensible option when choosing how to manage shared information safely and efficiently while maintaining on-demand access capabilities.

Kansieo.com

Amit Kothial asked:




No matter what the state of the economy is, there is always room in the business industry for students who finished accounting degrees.

It is actually one of the oldest professions in the world and if you are considering a career in this field, there are 5 best accounting degrees that you can choose from:
Public Accounting Management Accounting Internal Auditing Forensic Accounting Government Accounting
Tips when Looking for an Accounting Training Program

Now, if you are considering establishing a career in the field of accounting, the first thing that you need to do is choose from one of the top schools that you can enroll at.

Some of the factors that you need to consider when choosing which school to go to includes its proximity to where you live, the availability of the accounting programs and majors that you wish to take and the type of accounting degrees that the school awards to students.

However, aside from focusing on the accounting majors that you are taking up, there are other skills that you should work on if you want to stand out among the rest once you go job hunting. First, make sure to brush up on your computer skills. No matter how good you are at the basics of this field, it will not be enough if you don’t know how to use a software or an accounting program that will make your auditing and accounting job easier.

Prior to the actual job hunting, get an internship so that the experience can be added on to your resume. Lastly, after deciding which of the many majors it is that you wish to focus on, you need to brush up on your skills regarding the fields outside of accounting to widen your scope as a professional.

Caffeinated Content

Al Bullington asked:




Personal accounting software may be a tool that finally helps you get control of spending and heads you toward where you want to be financially. However, it’s easy to buy products that quickly leave you at a dead end. It’s also easy to buy packages that are overly complex and hard to use. Here are 5 tips for getting software that’s just right.

Don’t Assume It Does It

Consider what financial takes you need done. For example, do you track investments? Do you owe money on loans? Some simple financial packages will do neither investment or loan tracking. So the first order of business is to think through what you really want to do. Then evaluate whether the package under consideration will do the job. If not, you soon reach a stooping point and whatever effort went into getting you to that point is wasted time and effort.

Consider The Climb

All software takes time and effort to learn. Climbing that learning curve may not cost you in money, though it can. But the climb can and will cost you in time, effort and struggle. Choose a package that seems to be as easy to learn as possible and that should also consider the availability of training resources too. Hopefully that training material is free too.

Do You Need Accounting Or Budget Help

It often is that what people want looks more like budget help than a full out accounting system. Then again, if you own a home business you likely really do need accounting functions. Some personal finance packages offer more in the way of budget help than others, including a whole community of people trying to get control of finances. That community may be a benefit or it may be a waster of time.

Keeping It Going Takes Something Too

What happens in the future if you hit and snag. Where is the help to get you through rough spots? Is on-going support available and how much will it cost? Better find out now rather than later. More than once has an accounting software package been abandoned because it locked up and stayed that way. Don’t let it happen to you.

Free May Work

GNUCash is open source accounting software that has a loyal following. It’s free and used by many. Just looking at the website will give you a feel for the type of system this is. Do remember that no accounting software is free, not when you consider what it takes to learn the system and keep it going.

Another great possibility is free web based software. COnsider getting all your financial information all in one place and all up-to-date all the time. Add to that full budget capability and budget tracking as well. Get all that and more and all for free and all from the major seller of personal financial software as well. It’s available and it is free.

Personal accounting software exists to help you get control of all parts of your finances. The package you pick should do all that needs doing but should be no more complex than is necessary. Simpler systems require less investment to learn and less effort to keep the system going. Often all you need is available online and for no cost at all.

accounting software

Linda M. Villanueva asked:




Construction accounting software has many benefits that can help the business of construction and speed up the work to a great extent. However, there are six major benefits which are really important and they are named as professionalism, project management, consistency, accuracy, speed and procurement. These are the major benefits and factors that are associated with this software. Let us study these benefits in detail.

Speed is considered to be one of the primary benefits of using a computerized construction accounting software. The main reason behind this is that it saves the time and money which can be very beneficial and profitable for your business. The company can complete a lot of work in less time. The second important benefit is accuracy. We all know that the nature of economy keeps changing with time and all the businesses need to update themselves on a continuous basis. In the construction industry the contractors have to track things like the subcontract expenses, equipment costs, material costs and labor costs. They also have to keep a track of all the back orders and installed and stored materials. Thus, this software can be used to determine all these costs and then decide a selling price. It is very important to buy proper estimation software for the business for efficient and quick working which can never be completed with the traditional ways.

This software allows you to make estimates that can be used for the same procedures and costs every time. It also allows the comparison of the actual job cost and the capacity to keep the history of job costs which provides the estimator tools to use later in order to adjust the estimates and avoid costly overruns. The project manager needs to decide the amount of labor resource and equipment he needs to use in the business and he can do this with the help of the estimate. It can also be used to schedule subcontractors that are needed to keep a check on the progress of the work. After this the accounting department will use the estimate to make the procedure of values and keep a track of the working costs. The computers will perform multiple tasks which will make activities like purchase, project management, correspondence and estimation even more efficient and accurate.

This construction estimation software also provides a high degree of professionalism along with the other factors and benefits. Nowadays the contractors use this software for business organization and optimization. It is also used as a sales tool for document costs and helps in producing the quotes that improve the customer relations. Thus, this estimation software is very smart and efficient as it provides the right kind of tools which enables the contractor to make good decisions and helps in automatic adjustment of labor units and installation calculation.

Due to the various benefits associated with the estimation software many contractors are using them instead of the traditional methods of estimation. Thus, this was some essential information about construction accounting software and the various advantages associated with it.

Caffeinated Content

Stephanie Elsen asked:




Are you and your business in need of new accounting software? Are you dreading the buying process because of stories you’ve heard? Many times, the stories you hear are just that. Check out these four myths about buying accounting software, and you might just gain the confidence to make the software purchase you need for your business.

1. Transition times are long and tedious.
You may have heard others talking about their accounting software switch and how long it took to implement the new software. This is not a rare occurrence, but it’s definitely not a requirement for switching software. There are things you can do to prevent long transition times. Typically, these issues are the result of a lack of planning. You can lessen transition time by scheduling your data transfer or new data entry ahead of time. If your software vendor is going to help you, be sure they are committed to that date. Also make your internal staff aware of the scheduled date well ahead of time. When the data transfer/entry day arrives, you, your staff, and your vendor should place your primary focus on getting the data into the new software system. One mistake many businesses make is making the software transition a low priority, so efficiencies get lost, errors are made, and the process seems to drag on. Make your transition a priority, and it will be completed more quickly and efficiently.

2. You should wait until you have plenty of spare time to make the software transition.
It is true that you should schedule your data transition/entry during a time you are not at your busiest. However, if you wait until you are absolutely sure the transition day will be free and clear of any problems, that day will never come. Your business will always have work to be done, issues to deal with, and problems to solve. Therefore, be realistic and shoot for a day and time that will provide those who are involved enough time to focus on the transfer.

3. There are hidden costs associated with accounting software systems that pop up after you purchase it.
Believe it or not, many times what are considered “hidden costs” turn out to be needs and features that had not been discovered during the software search. This happens either because you forget to mention it, the sales representative didn’t ask about it, and/or your business needs changed. To keep this from happening, take control of your business needs well before your software search even begins. Make a list of the features your business needs. Get other departments involved in creating the list, and let them know that it will affect their job for years to come. Provide that list to your vendor and ask for a written quotation. Be sure your vendor understands your type of business, so they are also equipped to ask relevant questions you may not have considered.

4. There is a software package out there that precisely meets your every need.
Unless a software vendor is completely customizing a system that is specifically tailored to your business, expecting it to match up perfectly with your every need is unrealistic. What is important, is to find one that fits your needs BEST, at a price point you can afford. This is where your list of needs comes in handy. Use the list, and also schedule a live demonstration of the system for everyone involved. This way you can learn how the system will handle your needs, or discover deal breakers well ahead of time.

With careful planning and preparation, your company can find an accounting software system that will fit well and help your business for years to come.

Caffeinated Content – Members-Only Content for WordPress