Good article on Bnet identifying the differences between an operating lease and a capital lease. Includes accounting for each type of lease.
Accounting Basics: Public Accounting vs. Private Accounting
Next in my Accounting Basics Series: Public Accounting vs Private (Industrial) Accounting.
The old accounting text book defines public accounting as: offering accounting and related services for a fee to companies, other organizations and the general public. The other services can include auditing, tax services and consulting. The certification offered for this type of accountancy is a Certified Public Accountant. The exam is prepared and administered by the American Institute of Certified Public Accountants (AICPA).
Private (or industrial accounting) is the opposite. Instead of providing services to many clients, a private accountant provides services to a single business. In a business consisting of many accountants, the 'head accountant is typically called the controller. Private accountants may or may not be CPA's. The National Association of Accountants does offer a certificate for private accountants called a Certificate in Management Accounting (CMA). Private accountants are often much more specialized and have to adapt to the needs of their company (controlling costs, budgeting, accounting systems, etc.)
Target Follows Blockbuster and Goes Blu Ray
Follow up to my June 20, 2007 post. Looks like Target is following Blockbusters lead and supporting Blu Ray...
NEW YORK (Reuters) - Target plans to carry only Blu-ray high definition DVD players through the holiday shopping season, a move that boosts the Sony-backed technology and may deal a blow to rival HD-DVD.
In a statement on Thursday, Sony Corp. said that Target will exclusively carry Blu-ray players "at least through the holiday season" and will also expand its inventory of Blu-ray discs.
The move begins in October with Target's sale and promotion of Sony's BDP-S300 unit, which sells for about $500.
It was the second major retailer in as many months to throw its weight behind Blu-ray in the industry wide standards war reminiscent of VHS and Betamax. Blockbuster, the largest U.S. provider of home movie entertainment, in June set plans to line its shelves with Blu-ray DVDs, saying that Blu-ray rentals are "significantly outpacing HD DVD rentals."
HD DVD is developed by Toshiba Corp. and backed by Microsoft Corp. and film studios including Warner Bros.. It competes with Sony's Blu-ray which is built into its PlayStation 3 game console, and supported by companies such as Samsung Electronics Co., Apple and Dell.
Earlier this month, the HD DVD camp said its stand-alone video players have outsold rival Blu-ray players by a three-to-one margin in Europe's main markets so far this year.
Mass market acceptance of high-definition video is still some way off, due in part to the high price of the devices, and the fact that some movies and programs are available on one platform and not the other.
(Reporting by Franklin Paul)
#21 Is reimbursement to staff considered payroll cost?
It's common business practices to reimburse some of the expense incurred by the employee for business purposes. For instance, phone bill. The reimbursement will be credited into employee accounts in conjunction with its regular pay.
How should the accountant account for this reimbursement ?
Some of the HR manager would account reimbursement into its payroll costs, and included the amount as total payroll costs for the respective period. Hence, accountant should separate the payroll cost and the reimbursement, said Reimbursement for phone bill or etc.
This is to ensure that the account reflect the fair view of the business operation. To illustrate, if reimbursement has been included in the payroll costs. Outsider, who rely on the financial statement of the Company, might have the opinion that the payroll cost of the company is unnecessaily high. Whereas, other operational costs are below the industry average.
The implication for auditing in here is : be aware of any reimbursement while doing the payroll analysis and reclass the reimbursement out from payroll, if necessary.
How should the accountant account for this reimbursement ?
Some of the HR manager would account reimbursement into its payroll costs, and included the amount as total payroll costs for the respective period. Hence, accountant should separate the payroll cost and the reimbursement, said Reimbursement for phone bill or etc.
This is to ensure that the account reflect the fair view of the business operation. To illustrate, if reimbursement has been included in the payroll costs. Outsider, who rely on the financial statement of the Company, might have the opinion that the payroll cost of the company is unnecessaily high. Whereas, other operational costs are below the industry average.
The implication for auditing in here is : be aware of any reimbursement while doing the payroll analysis and reclass the reimbursement out from payroll, if necessary.
#20 Practical audit tips- Insurance Coverage
Insurane policies is a way of the company to mitigate/ minimize certain aspect of risks exposed by the company, for instance natural disasters, flood.
Auditors could check the amount insured by the insurance policies bought by the companies against the respective assets. For instance, the companies might have few fire insurance policies amounted to $2 million for its buildings.
Auditors could ensure that the fixed assets are while covered by examing the Net Book Value of the buildings. Assuming the NBV of the buildings are $3.5 million, and this signaled that additional insurance should be entered to ensure that the risk is monitored cautiously.
Auditors could check the amount insured by the insurance policies bought by the companies against the respective assets. For instance, the companies might have few fire insurance policies amounted to $2 million for its buildings.
Auditors could ensure that the fixed assets are while covered by examing the Net Book Value of the buildings. Assuming the NBV of the buildings are $3.5 million, and this signaled that additional insurance should be entered to ensure that the risk is monitored cautiously.
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