1 Exam Prep Builder's Guide to Accounting Tabs and Highlights

Transcription

1 1 Exam Prep Builder's Guide to Accounting Tabs and s These 1 Exam Prep Tabs are based on the 2001 edition of the Builder's Guide to Accounting by Michael C, Thomsen, copyright Craftsman Book Company. Each tabs sheet has five rows of tabs. Start with the first tab at the first row at the top of the page; proceed down that row placing the tabs at the locations listed below. Place each tab in your document, manual, or book setting it down one notch until you get to the last tab. Then start with the highlights. 1 Exam Prep Tab Page # Why Keep Records 7 Aging List 45 Managing Receivables 53 2% net Bad Debt Procedures 63 Bad Debt Ratio 65 Planning for Profits 87 Volume /Profit 90 Check Writing & Recording 98 Pegboard 103 IRS Forms 137 Overhead Expenses 141 Comparison Ration 148 Cash Budgeting 173 Breakeven Point Exam Prep Builders Guide to Accounting 1

2 Cost & Expense Records 187 Accounting for Costs & Expenses 197 Recording before the Event 237 Financial Statements Statements 249 Closing the Books 250 Putting Together A Statement 278 Posting Errors 281 Comparative Period Statements 289 Financial Statements 329 Balance Sheet 331 Income Statement 333 Cash Flows 335 Automation 337 Income Tax Planning 343 This concludes the tabs for this document. Please continue with the highlights on the following page. 1 Exam Prep Builders Guide to Accounting 2

3 8 'The sales journal is a detailed record... "Good sales records are also helpful in finding the right market for your services" 9 "Many builders run into their single largest bookkeeping problem... tracking receivables" "The check register is a listing of all 10 "Balance your account every month" "Setting up a controlled petty cash fund is the best "Your records should let you calculate the hourly cost of owning and operating your equipment... "A good budget for overhead expense..." "Bills you've sent out are income, even before the cash comes in and..." 12 "The chart of Accounts is a numbered list..." "These ratios s show the month to month trend..." 14 "The most common modern bookkeeping method is called double entry bookkeeping" "If retainages or similar withheld amounts..." "An aging list indicates what percentage of total receivables 47 "Consider a Pegboard system..." 48 "Previous balance + charges-credits = current balance" 49 Note the list of adjustment entries 54 Notice figure 4-1.Follow the numbers for January. The chart shows how to calculate the length of time it is taking a company to collect $. 55 "So that's the first rule: Stay on top " "But when your assign an account to a collection..." 59 It may help to offer incentives... 2% - 10 days net, thirty" 64 "For Tax purposes, bad debts can be recognized..." Notice the two journal entries for bad debt "If you don't adjust your accounts receivable..." 66 "The ratio of credit sales to total sales"... "the ratio of delinquent receivables to total receivables". Note that "to" means divide. Note the "credit sales ratio" and the "delinquent ratio" 89 "Remember that the present combined yield is 10.7 percent and the commercial..." 90 "Profits vary with volume and expense levels" 91 "Selling expenses usually rise in steps and are related to business volume. While selling expenses..." 1 Exam Prep Builders Guide to Accounting 3

4 91-92 Each one of the shaded boxes represents ways of dropping low profit business. 97 This chapter deals with how to reconcile checkbook. See cram book for examples. 99 "Here's the basic information you must record when you write a check..." "Here are the types of adjustments to make..." note that these adjustments are made based on whether you are reconciling with your bank statement, or with your checkbook. 101 "The check register shows at a glance..." "Prepare the check register directly from your..." "Don't go longer than 30 days without..." "In figure 9-4 all payroll checks are listed..." 103 "Avoid writing checks made out to cash" "In a pegboard system there s no..." "The disadvantage of pegboard..." 108 "The most efficient way to keep track of accounts payable on a monthly basis is to maintain two check registers..." 130 "The payroll register is the same..." "Weekly costs analysis..." 132 "A pegboard system for payroll accounting..." IRS Forms. Notice the various definitions of forms. "Form W-4 includes the following... " "Summarized below are the federal tax forms..." This effectively makes unemployment taxes..." 141 "Earlier in this book..." Notice the distinction between the types of expenses. This relates to the study of the income statements chapter 7 & Notice the list of variable and fixed expenses. Fixed expenses do not relate to the volume of sales. Variable expenses do. 144 "The budgeting process has three parts..." "The goal of a budget...is to establish 147 "Pages recommended for general ledger variable, fixed" Notice additional variable and fixed expenses listed. "The two ratios that are most significant to a builder in analyzing his overhead are..." 148 "Comparison ratio = income expenses" 149 "Recording expenses..." notice the examples of credits debits. "The entry to accrue an expense is..." "... the entry to record a prepayment such as insurance is..." "Liquidity Tests" "Current ratio... acid test (minus inventory)...expenses to sales, income to net worth debt to capitalization" 1 Exam Prep Builders Guide to Accounting 4

5 176 "There are two principal ways to prepare a cash budget or forecast " 178 "You reach a breakeven point when your profits fall to zero..." see cram book for example 181 Notice the list of "Problems & Solutions" these are types of bookkeeping errors and problems. 188 "Objectives of the Cost System..." 190 Figure 15-3 this is an actual verses standard study. Given a reference book prediction, how long will it take your crew to perform the same work? Keep in mind it is actual divided by standard. See cram workbook for examples. 191 "Deferred debit, deferred credit" "The general ledger entry...would be..." "The same rules apply for cost recording on your projects..." "Deferred income is neither a current nor a long term liability. It's a deferred credit..." "The trick to cost accounting is achieving accuracy" 229 "To allocate fixed overhead by direct labor hours..." Notice the method outlined on this page Notice examples of debits / credits "Prepaid expenses... The entire amount should be classified as a prepaid asset and assigned..." "Reserve this procedure for expenses that..." Notice examples of debits./credits 243 "Controls... know at any time exactly what items are in the prepaid assets..." "The other method of accounting is called "Cash method"..." 250 "After you post your ledger at the close of the period... trial balance. 251 "Closing Adjustments Balance sheet Accounts definition of each category. "Current assets are liquid assets..." "A fixed asset... includes the gross value of..." 268 A 2 to I current ratio is the minimum. Considered healthy for a business..." "Here's an example of how a trend shows you more about a business than a single ratio..." Notice how one way to classify ratio's arc based on what they tell use. each of the ratios presented. 272 " There are four ways to present ratios..." (1-4) 273 " A list of common ratios..." highlight list 1 Exam Prep Builders Guide to Accounting 5

6 281 Here are some common posting errors..." The trial balance...the sum of all accounts equal zero" Adjusting the trial balance 284 The books arc closed at the end of the year..." Do this by reversing the balance in each account to leave a zero balance..." "At the beginning of each new year restore the reversal entries for accounts payable and accounts receivable..." "The following net worth accounts are commonly found in the general ledger itself' 285 Formula for Adjusted equity, defines retained earnings 294 "You may want to compare actual results to budget expectations..."(1-3) 326 Explains numbering system. 327 Example of Chart of Accounts 329 Introduces a proper set of books. These should be linked to page 225, the short versions. 339 Following are some examples of accounting transactions. 340 Research before you buy... "Evaluating a software system..." (all boxes) "Techniques used to minimize taxes include shifting. conversion, deferral, and sheltering". Other tax planning -each of the italicized entries. 345 Here's a summary of tax saving ideas. 1 Exam Prep Builders Guide to Accounting 6