This Ain’t
Your Momma’s
Quickbooks!
Effective Accounting
Management with TotalFBO
Presented by: Janice M. Pratt
Sr. Research Analyst
Horizon Business Concepts, Inc.
2010 TotalFBO® User Conference
Do You Do GAAP?
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Generally Accepted Accounting
Principles
accounting rules used to prepare,
present, and report financial
statements
includes local applicable Accounting
Framework, related accounting law,
rules and Accounting Standards
The Philosophy of Accounting
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The conceptual framework for the
professional preparation and auditing of
financial statements and accounts.
The issues which arise include:
• the difficulty of establishing a true and fair
value of an enterprise and its assets;
• the moral basis of disclosure and discretion;
• the standards and laws required to satisfy the
political needs of investors, employees and
other stakeholders.
GAAP is Composed of:
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4 basic Assumptions
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4 basic Principles
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4 basic Constraints
GAAP Assumptions
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Business Entity
• Separate from personal or other business finances
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Going Concern
• Business is expected to continue
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Monetary Unit
• Stable currency
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Time-period
• Reporting divided into periods
GAAP Principles
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Cost
• Verifiable, unbiased asset values
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Revenue
• Income reported when earned, not when cash received
(Accrual Accounting)
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Matching
• Expenses reported when related income reported
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Disclosure
• Information disclosed should be enough to make a judgment
while keeping costs reasonable
GAAP Constraints
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Objectivity
• Financial Statements to be backed up by objective evidence
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Materiality
• Reported information items should be significant
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Consistency
• Use same methods and principles from year to year
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Prudence
• Choose method least likely to overstate assets and income
GAAP is Changing
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Originally promulgated by AICPA
Council
• American Institute of Certified Public Accountants
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Now codified and updated by FASB
• Financial Accounting Standards Board
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Soon to be replaced with IFRS
• International Financial Reporting Standards also subscribed to
by most European countries
TotalFBO designed to GAAP
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Double-entry, accrual system
Standard chart of accounts design
Control accounts supported by detail
ledgers
Secure audit trail
Work in Process posting
Date-sensitive, Date-controlled
Business entity database/license structure
Spreadsheet Accounting
(Quickbooks, Excel, Etc.)
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Can be cash or accrual
No balancing required
No standard chart of accounts
No Work In Process Posting
Controls missing or easily overriden
Designed to be uploaded to “professional”
system for CPA review
Assumes purpose is mainly for tax
preparation task
Professional Accounting
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Use Professional Accounting System
to achieve professional results
• TotalFBO, MAS90, Great Plains
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Use Spreadsheet Accounting System
when accountability and growth are
not considerations
• Clubs, personal finances, analysis
Who will do your accounting?
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Accounting clerk
Bookkeeper
Full-charge Bookkeeper
Accountant
CPA
CFO
Your spouse
Accountant Training
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Daily business information &
statement preparation
Pricing decisions & business
modeling
Tax preparation
Auditing
Specialty areas (international, oil &
gas, securities)
Financial planning
Should you hire a CPA?
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YES!
For specialty areas
(planning & income
tax prep)
For audits
For business
changes
(acquisitions, sales,
legal entity choices)
For certain Analysis
projects
NO!
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For daily
bookkeeping
management
For Internal financial
statement prep
For account
reconciliations
For sales taxes
For payroll
“Full-Charge” Bookkeeper
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Understands double-entry accrual system
Can prepare financial statements with
integrity
Fully skilled in sub-ledger management
Can manage accounting staff
Can see the “big picture”
Can customize POS, chart of accounts,
and other systems to produce appropriate
information
Elements of Accounting System
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General Journal
General Ledger
Detail Ledgers:
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Accounts Receivable
Accounts Payable
Bank Accounts
Payroll Ledger
Inventory Changes
Asset Management
Supporting Documentation
Financial Reports
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Journals
Account Details
Trial Balance
Bank Account Reconciliations
Accounts Payable Aging
Accounts Receivable Aging
Physical Inventory Valuation
Payroll Register
Asset Valuation
Budget Comparisons
Financial Statements
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Balance Sheet
What is the value of the business at any POINT in time?
Includes Assets, Liabilities, Net Worth
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Income Statement (Profit & Loss)
What is the income relative to costs, expenses and taxes
for a specified PERIOD of time?
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Cash Flows
What were the sources of cash into the company and
how/where was it spent?
Those Debit & Credit Thingeys...
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The heart of “Double Entry”
accounting
LEFT and RIGHT sides… OF WHAT?
What’s the point? Isn’t it just double
work?
Assures Math accuracy
Shows Effect on business and
Source of the change
Balancing the Books
Dr
ASSETS
LIABILITIES
Cash
Receivables
Inventory
Building & Equipment
“Goodwill”
Payables
Loans
Cr
EQUITY
Investment
Net Profit or Loss:
Dr INCOME
Sales
Interest
Asset Sales
EXPENSES Cr
Costs
Expenses
Payroll
Taxes
Evaluating Performance
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Are financial statements timely?
Are they complete?
Are they accurate?
Does department seem “always behind”?
Is one staffer working too hard?
Can you get answers to business
questions?
Is employee flexible as business changes?
What’s the Real Problem?
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Are YOU requiring the wrong things?
Is system unnecessarily complex?
Have you understaffed?
Is equipment/space outdated?
Is employee lost/overwhelmed?
Is better training the answer?
Get Up to Speed
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Careful hiring and Promotion Practices
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Bookkeeping Courses
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www.totalfbo.com/HBCSupport/Educate.aspx
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Horizon training ??