The Full-Time Bookkeeper: Your Job Is To Make Sure All

The Full Time Bookkeeper Your Job Is To Make Sure All

As the full-time bookkeeper, your job is to make sure all transactions are recorded properly. If there is an error, each correction needs the reason for the change and the effect on each account, whether it is an increase or decrease.

1. What are some examples of transactions that would need to be recorded or journalized?

2. Can you provide an example of a transaction and the journal entry from either Chapter 2 of our textbook or from your current employer?

3. Why is it important to accurately record the transaction you selected?

4. Can you think of any events where no entry would be recorded?

5. Suppose a co-worker has recorded a cash receipt twice and wants you to record a correcting entry that will reverse the mistakes. The correcting entry will record a credit to the Cash account and a debit to the Sales account. Your co-worker has offered to buy you dinner for fixing this mistake.

6. What should you investigate before making a decision about the correcting entry? What is happening to the Cash account? Would you accept a dinner offer from your co-worker for fixing the mistake?

Discussion 2 Based on your review of Chapter 3, describe an adjusting journal entry that is needed at the end of an accounting period. Why are adjusting entries important and how do they contribute to accurate financial reporting?

Accrual accounting is required under U.S. GAAP. One of the main principles of accrual accounting is the Matching Principle, also known as the Revenue Recognition Principle and the Expense Recognition Principle. Consult are liable resource online and in your own words, explain the difference between accrual basis accounting and cash basis accounting. How does this relate to the Matching Principle?

Paper For Above instruction

The role of a full-time bookkeeper is fundamental to maintaining the financial integrity of an organization. Accurate recording of transactions ensures that financial statements reflect the true financial position of the business. This paper explores various aspects of transaction recording, correction of errors, the importance of adjusting entries, and the principles underlying accrual versus cash basis accounting.

Types of Transactions to Record include sales, purchases, receipts of cash, payments, payroll entries, and adjusting entries for accrued or deferred items. For example, a sale on credit would be journalized by debiting Accounts Receivable and crediting Sales Revenue. Similarly, paying utility bills involves debiting the utility expense account and crediting cash. These transactions are essential to track income, expenses, assets, and liabilities properly.

An Example and Its Journal Entry from Chapter 2 could be a service provided on account: debiting Accounts Receivable and crediting Service Revenue. This entry recognizes that the company earned revenue but has not yet received cash. Proper journal entries ensure that the financial statements accurately reflect the company's revenue and receivables, maintaining alignment with accounting principles.

The Importance of Accurate Recording lies in ensuring financial statements are reliable. Misstated accounts can mislead stakeholders, lead to incorrect decision-making, and potentially cause legal or regulatory issues. For instance, under-recording expenses inflates profit, giving a false picture of profitability. Precise documentation also supports internal control and audit processes.

Events with No Entry include occurrences like the destruction of stock by a natural disaster before it is sold or changes in market value that do not involve actual transactions. These are non-financial events or temporary fluctuations that do not warrant an accounting entry unless they involve identifiable transactions recognized under specific accounting criteria.

Investigating Correcting Entries is crucial, especially in cases involving errors like double recording of cash receipts. Before reversing the mistaken entry, it’s important to verify the actual cash balance and the nature of the mistake—was it a duplicate sale, or was cash omitted from a previous entry? In the case of the correction involving a credit to Cash and a debit to Sales, understanding what part of the transaction was duplicated informs whether the correction is appropriate.

Decision Regarding Gift Offers such as dinner from colleagues should be grounded in ethical considerations. Accepting or declining such offers depends on organizational policies and personal integrity. While fixing errors is part of professional responsibility, accepting favors could be perceived as a conflict of interest or influence, raising ethical questions.

Adjusting Journal Entries at Period-End are necessary to record accrued revenues and expenses that have not yet been documented. For example, accrued wages involve debiting Wages Expense and crediting Wages Payable. These entries align revenues and expenses with the period in which they are incurred, thus ensuring that financial statements reflect the true financial condition at the end of the reporting period.

Importance of Adjusting Entries lies in their role in conforming to the Matching Principle, which ensures that revenues are recognized in the same period as the expenses incurred to generate them. Without these adjustments, financial statements could overstate or understate income, impairing their accuracy and usefulness for stakeholders.

Accrual vs. Cash Basis Accounting is a fundamental distinction in financial reporting. Accrual accounting recognizes revenues when earned and expenses when incurred, regardless of cash inflows or outflows, aligning with the Matching Principle. Conversely, cash basis accounts for transactions only when cash is received or paid, which can distort the temporal relationship between income and expenses.

Relation to the Matching Principle is direct; accrual accounting ensures that expenses are matched with the revenues they help generate, providing a more accurate depiction of profitability during a specific period. Cash basis, lacking this alignment, may portray a misleading financial picture, especially in periods of significant accounts receivable or payable fluctuations.

In conclusion, a full-time bookkeeper must master transaction recording, correction procedures, and understand the principles that ensure financial statement accuracy. Proper application of adjusting entries and the choice between accrual and cash basis accounting underpin transparent financial reporting that stakeholders can rely on for decision-making.

References

• Fess, P. (2020). Accounting Principles: A Business Perspective. Cengage Learning.
• Gibson, C. H. (2019). Financial Reporting & Analysis. Cengage Learning.
• Horngren, C. T., Sundem, G. L., Elliott, J. A., & Philbrick, D. (2018). Introduction to Financial Accounting. Pearson.
• Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate Accounting. Wiley.
• Zimmerman, J. L. (2021). Accounting for Decision Making and Control. McGraw-Hill Education.
• Financial Accounting Standards Board (FASB). (2022). Accounting Standards Codification. FASB.org.
• U.S. Securities and Exchange Commission (SEC). (2023). Investor Guide to Financial Statements. SEC.gov.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Accounting Principles. Wiley.
• Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2020). Financial Accounting Theory and Analysis. Wiley.
• American Institute of CPAs (AICPA). (2021). Code of Professional Conduct. AICPA.org.