Monthly Archives: December 2011

Using the Matching Principle

In the conceptual framework for financial reporting there are three levels of financial accounting: 1.) objectives 2.) fundamental concepts and 3.) recognition and measurements. This blog will focus on the third level, specifically the matching principle under the basic principles ...
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Importance of Policy & Procedure Manuals

What are policies and procedure (P&P) manuals and why should your company care about creating and maintaining them?

Policy and procedure manuals document various business processes through a universal form of communication. To illustrate their importance, think of the following ...
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Accounting for Marketing Costs

With the end of another year approaching, businesses are busy focusing on their new goals for the coming New Year, and are often spending on items that will help them kick off next year with a bang.

As a result, ...
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Fraud Prevention – Accounts Payable

Systems and processes are necessary functions in order for any business to operate efficiently and effectively. Accounts payable is one of the processes that generates heavy paperwork, heavy labor hours, and a high risk of fraud and error. For these ...
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Small Business Fraud, Part 1

The statistics are staggering…

  • $150,000 is the average loss from fraud for businesses with less than 100 employees.
  • $80,000 is the average loss from fraud for businesses with more than 100 employees.
  • 50% reduction in loss from fraud for businesses
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Period Costs vs. Product Costs

There are two types of expenses in managerial accounting: period costs and product costs. A period cost is defined as all costs in the profit and loss statement that is not a cost directly associated with a product, also known ...
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Prior Period Adjustments

In an ideal world, the books are closed, financial statements are published, and adjustments to prior periods are not necessary. However, despite our best intentions, this does not always happen. What are prior period adjustments and when are they appropriate? ...
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