Accounts Dept Guide
Policy and Procedures
TABLE OF CONTENTS
Contents
Policies and Procedures ........................................................................................ 4
Duties of the Accounts Payable Clerk ............................................................. 4
Key responsibilities........................................................................................ 4
Company Procedures to make corrections ...................................... 4
Policies and Procedures ........................................................................................ 6
Duties of the Accounts Receivable Clerk........................................................ 6
Key responsibilities........................................................................................ 6
Company Procedures to make corrections............................................................... 6
Asset Register and Depreciation ....................................................................... 7
Balance Day Adjustments .................................................................................... 8
Bad & Doubtful Debts ............................................................................................ 9
Adjusted of inventory items .............................................................................. 10
Financial Statement Ratios and Calculations ............................................. 11
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 3
Policies and Procedures
Duties of the Accounts Payable Clerk
The Accounts Payable Clerk’s role is to perform data entry and general accounting
tasks within the Accounts Department.
Key responsibilities

Process invoices and check for accuracy

Check GST entries on invoices, adjustment notes received

Enter invoices into the accounting system

Receive adjustment notes and enter into the accounting system

Answer accounts payable queries

Reconcile ledger accounts with suppliers statements

Write cheques for payment of invoices

Enter cheques into accounting system
Company Procedures to make corrections

Rule one line through any error and re-write the correct amount above in
black or blue pen

Initial any alterations

Do not use liquid paper

Do not write over the top of figures

Do not use pencil

Do not use coloured pens

Write figures and words neatly
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 4
Manual Procedure Steps
Enter source documents in
Purchase Journal
Purchase Return Journal;
Cash Payments Journal
Total each Journal
Post from Journals
Purchase Journal
Purchase Returns Journal
Cash Payments Journal
To Accounts Payable Ledger
Complete end of month Reconciliation
Subsidiary Accounts Payable Ledger
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 5
Policies and Procedures
Duties of the Accounts Receivable Clerk
The Accounts Receivable Clerk’s role is to perform data entry and general
accounting tasks within the Accounts Department.
Key responsibilities

Process invoices, adjustment notes and statements

Reconcile adjustment notes to invoices

Process payments received

Contact customers regarding payment of accounts

Process deposits into Company Bank account

Oversee debtors’ accounts

Answer accounts receivable queries
Company Procedures to make corrections

Rule one line through any error and re-write the correct amount above in black or
blue pen

Initial any alterations

Do not use liquid paper

Do not write over the top of figures

Do not use pencil

Do not use coloured pens

Write figures and words neatly
Manual Procedure Steps
Enter source documents in
Sales Journal
Sales Return Journal;
Cash Receipts Journal
Total each Journal
Post from Journals
Sales Journal
Sales Returns Journal
Cash Receipts Journal
To Accounts Receivable Ledger
Complete end of month Reconciliation
Subsidiary Accounts Receivable Ledger
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 6
Asset Register and Depreciation
1. Must comply with legislation governing companies
2. To include all items that have an original cost in excess of $300(excluding
GST)
3. Cost price to include the purchase price, delivery and installation and any
non-recoverable GST or import duties. It should not include any maintenance.
4. The Asset Register must contain:a. The “equipment name” should be a general name or description of
asset.
b. Equipment ID number if applicable
c. The location of the asset. This is to be a room number or if a mobile
item a room where the item returned to when not in use.
d. the supplier of the asset and the order number the asset is purchased
on.
e. the date purchased
5. Any assets obtained under lease agreements. enter the lessor as the supplier.
The original cost/value should be the price of the equipment if it had been
bought outright rather than by lease.
6. To only include fixed assets which have a useful life of more than one year.
7. Any improvements or alterations made to existing asset which increases the
capital value, to be added to the cost of the original asset.
8. Calculation of depreciation rates. The following depreciation rates apply:Type of asset
Fixtures and Fittings
Office Equipment
Motor Vehicles
Building
%
25
20
25
20
9. Asset Register to be kept electronically. either on a spreadsheet or using
Accounting Software package.
10. To calculate the value of Asset being disposed you must depreciate the asset
to the date of disposal, value of asset reduced by the depreciation, if amount
received greater than depreciated value of asset, value of difference to be
posted to Profit on disposal of asset account, if amount received less than
depreciated value of asset, value of difference to be posted to Loss on
disposal of asset account.
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 7
Balance Day Adjustments
1. Adjusting entries to be entered as journal entries at the end of each
accounting period (quarterly)
2. Expenditure to be allocated to the period in which it occurred.
3. Prepaid Income
4. Prepaid expenses
5. Accrued Revenue/Income
6. Accrued expenses
7. Inventory adjusting entries are to determine the cost of goods sold
expense. These figures are to be calculated as per the standard in
AASB101 Presentation of Financial statements.
8. GST Clearing Entry This entry to b completed at the end of each quarter
to reflect the net amount of GST in Balance sheet
9. Reversal of accrued and prepaid adjustments to be entered on 1 st day of
the new quarter to correct the amounts for that quarter
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 8
Bad & Doubtful Debts
Company policy is to use the In Direct Write-off method when writing off a bad
debt, this does not absolve the debtor of their legal liability to pay us, we are
simply recognising, that we are unlikely to collect the amount. On average in
Australia, 1.5% of debts go bad, Swaggies management have calculated Bad
Debts over the last few trading years have averaged at about 1% of sales.
The Company is required by the Corporations Law to review our provision for
doubtful debts prior to the preparation of annual financial statements. Therefore
at the end of the financial year it is necessary to review the Provision for Doubtful
Debts.
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 9
Adjusted of inventory items
a) Swaggies uses the Average Cost method for recording value of
Inventory, this is calculated by the total value of stock divided by the
quantity in stock for each stock item.
b) Inventory adjustment to be entered at completion of three monthly
stock take
c) Stock Quantity Adjustments are due to spoilage, damage, theft and
samples taken out of the warehouse.
d) These adjustments are to be made at the current cost of the item.
e) Quantity Enter the adjustment stock quantity amount only at the cost
price. Do not adjust through historical inventory
f) Cost Adjustments to be made when a cost price of goods is incorrectly
entered.
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 10
Preparing end of period financial reports
Swaggies policies and procedures for preparing Cash Flow statement
Opening balance from
Bank Statement
Cash Inflow
Total money received
Cash Outflow
Total money paid
Net Cash flow Total Cash
received less Total cash paid
Funds available
Opening Balance less/plus
Net Cash flow this must equal
Closing bank balance account
at the end of the period.
Financial Statement Ratios and Calculations
Stock turnover ratio compares a Swaggies cost of sales on its income statement
with its average inventory balance for the period.
Inventory Turnover Ratio = Cost of Sales / Average Inventory for the Period
Operating margin compares a Swaggies operating income to net revenues
Operating Margin = Income from Operations / Net Revenues
Working capital is the money leftover if a company paid its current liabilities
Working Capital = Current Assets – Current Liabilities
Swaggies Pty Ltd is a simulated company used for training purposes only
Page 11