5 Accounting Equation Methods Catered For Corporations

With the ever thriving plethora of corporate accounting services in Singapore, it is not uncommon for companies to consider the option to outsource accounting to professional accounting firms. While that may be so, business owners are still highly encouraged to familiarise themselves with the basics of accounting so as to double-check and minimise the occurrence of subtle errors. For starters, here are 5 basic accounting equation examples catered for corporations:

  1. Basic

As a general practice, the basic accounting equation for corporations is denoted with assets being the sum of liabilities as well as Stockholders’ equity (Assets = Stockholders’ Equity + Liabilities). Different transactions will affect the corporation’s accounting equation, balance sheet and income statement in differing ways. Pay attention to the cash amount, accounts receivable, equipment, common stock, notes payable, retained earnings, treasury, service revenues, advertising expense, accounts payable and temp service expense amongst other factors.

  1. Stock

When stocks contain no par value and no stated value, the assets of the corporation as well as stockholders’ equity would increase in an equivalent amount, thereby balancing out the accounting equation. This accounting equation reveals that the source of the corporation assets are from the stockholders. Stocks that have been purchased from the stockholders by the corporation would be stored in the Treasury stock. In situations where corporations purchase their own stock for cash, the corporation’s total assets as well as stockholders’ equity decreases equivalently.

  1. Equipment

Another factor that affects the way the accounting equation is applied would be the purchase of equipment. Equipment purchasing is typically not treated as an immediate expense- the purchase only serves to become a form of depreciation expense only when the equipment has been placed into service. Pay attention to the date where the equipment is placed into service. If it hasn’t been done so, then there would be no expenses in the particular transaction, or earlier transactions when reported in the corporation’s income statement.

  1. Service Revenues (Earned Revenues)

Payment and billing methods differ from case to case. However, most corporations choose to bill their clients and offer a 30 day leeway before the payment amount is due. Once the corporation has performed and completed the service for their clients, this automatically means that the corporation has earned revenues, and reserves the right to receive the agreed upon amount from their clients. In situations like these, the stockholders’ equity in the accounting equation will increase. However, one must take care to note that the revenue transaction is instead recorded in the Service revenues section instead of directly into the Stockholders’ Equity account.

This is usually to provide corporations with the opportunity to report the revenues account through it’s income statement at any given time. The amount located in the revenues accounts will only be transferred into the retained earnings account after the year end.

  1. Temporary Service Expense

If corporations outsource work to temporary help services, the invoice can be recorded immediately while the amount is paid only after a certain amount of days. The accounting equation will then be amended to reveal that the corporation’s liabilities increase whereas the stockholders’ equity decreases by the amount of payment that is owed to the temporary help services. The liabilities incurred should be recorded under the Accounts Payable section whereas expenses should be recorded in Temporary Service Expenses.

Complete Guide to Managing Sales Orders In MYOB

When it comes to everyday processes, managing sales orders correctly can play an important part of data accuracy in your MYOB software. If you are looking for a guide to shed light to what you may have been neglecting or how you could better manage your self orders, this is the right place to come to!

Sales Order Recording

When you receive orders from your customers, you can choose to record them in 2 different ways. You can do so by creating a sales order first and subsequently converting the sales order into an invoice or simply create the invoice and skip the first process. However, do note that the method you choose can sometimes have consequences on when your software records the sales information into your general ledger account, since that’s only updated when the sales invoices are saved and not the orders. It is a recommendation that you start by recording sales orders since it helps users track the merchandise delivery process. To do so, look for your Enter sales option via the Sales command centre in your MYOB software.

Once you have opened up the enter sales window, look for the field that says INVOICE on the top left of your window and click on the arrow next to it so that you can choose the ORDER option. Now you can enter all the sales order details and assign reference numbers.

Converting Sales Orders to Credit Sale

In order to accomplish this, look for your sales order through the Sales register function in your Sales Command Centre. Search for the customer of choice and choose use customer once you have found the right one. Refine your search until you find the sales order you want and click on it. You will then be able to select Change to invoice. Make sure to click record once all the relevant details are correct.

Part Cash Part Credit Sale Recording

To do this, you will need to record the full amount of your sales, and then have your cash receipts recorded separately under the Receive payments option. Then using the receive payments window, select either deposit to account or group with undeposited funds. To perform the latter option, choose the relevant customer and display the invoices your customer has yet to pay. Enter the amount of payment you have received and choose the payment method before opening Applied payment details so that you can manually enter receipt information. You can then assign the cash receipt or reference number you want to use and find the invoice you want to apply it to.

Accounts Receivable Collection

Collect receivables from your customers and record the receipt of payment from your customer, as well as the money deposited into the bank. To record receipt from customers, look for the receive payments option from your sales command centre and choose the receive payment option to fill in relevant details. You can then either choose to deposit to your bank account for general ledgers or batch them and bank them in one go through group with undeposited funds. If you choose the latter, it will be recorded and you will be able to select it when you are preparing a deposit slip.

Sales Returns

If your customer returns your inventory, you will need to record sales returns by first creating a credit note through an invoice with negative amounts under the ship field and then applying it to a sales invoice. To begin creating, look for the enter sales function and choose invoice. Enter the relevant details into your invoice and make sure to leave the amount under your ship section as negative. Once you are done, click on record. Now apply the credit note to an invoice by choosing sales register under the sales command centre.

These are some of the methods in which you can perform sales order management. Keep these steps in mind and constantly practise- soon, you will be able to manage and sort through your sales orders with ease without panicking and fumbling.

Beginner’s Guide to: Editing Transactions In MYOB

Transactions are a part of the essential information you need recorded accurately in MYOB. You will rely on this data to keep everything on track, so it’s imperative that you know just exactly how to enter and edit them in your MYOB software. If you are new to MYOB, here is a little guide to help you gain your bearings with transactions:

Set Up

In order to create more flexibility for transaction editing ( like reversing transactions), you will first have to make sure that your MYOB software can accommodate it by tweaking your preferences. Under your MYOB set up menu, look for preferences and the security tab. Untick the Transaction can’t be changed, must be reversed option so that you will be able to directly edit them.

Find Transactions

Before you even begin editing transactions, you are required to find them. This can easily be done through the Find Transactions option or your Bank Register option in your MYOB software. Refine your search accordingly until you are able to locate the right transaction record and edit by clicking on them.

Non Editable Fields

While you are able to make changes to transactions, there are certain elements that cannot be changed. For example: Cash receipt payments. Your next best alternative is to access your Receive payment window and choose to delete receipts before re-entering by selecting the edit menu and locating the delete payment option. You can enter details by using the Sales Command Centre and re-typing in your transaction.  

Modifying Customer name

If your invoice has no transaction applied just yet but require a change in customer, choose the recorded invoice through the sales register and open the customer field. You will then need to delete the wrong invoice and manually record again with the right customer field selected. Make sure to print a hardcopy before deletion so you can re-enter accurate details. Make sure to use the Delete sale option and remove the invoice through the edit menu after you have done so.

If there are transactions applied to the invoice and you have to modify customer names, locate your transactions and display the invoice you need. Look for your edit menu and choose delete sale after you are done deleting the applied cash receipts before performing the steps above for modification with no transactions applied.

Keep these steps and tips in mind so that you can apply them to your own financial practises. By consistently making sure to perform these steps, you will be able to better your data accuracy, thereby eliminating the risks of miscalculation as well as being able to make better informed decisions based on reliable data.

5 Step Beginner Guide to MYOB Purchase Orders- What You Need to Know

MYOB purchase orders are important to get right as they contribute to data accuracy and workflow. If you are a beginner, there are certain functions you have to know in order to fully utilise and benefit from using MYOB. Here’s a 5 step beginner guide to MYOB purchase orders to get you started:

  1. Recording Purchase Orders

In order to start recording the purchase orders you have received, open up your Purchases command centre and look for the enter purchases option. Look for the top left corner and choose the arrow next to the field so that you can choose ORDER instead if it has not been chosen by default. You will then be prompted to fill in information so make sure to do that as concisely as you are able, according to the information you have currently at hand. Choose the supplier you need, the area it is shipped to, make sure the terms are correct and tweak the purchase number if you are required. Confirm data accuracy before clicking on record.  

  1. Credit Purchase Conversion

Convert your purchase order into credit purchases by looking for the Purchases Register in your MYOB software. Select the Orders tab so that you can view the purchase orders list you have created and choose the suppliers you want to display. Select the supplier you want and look for the specific purchase order you need from the supplier. After which, select it and choose the change to bill option so that it can be converted. You can then record according to what you need and make sure the information input is right.

  1. Accounts Payable Settlement

For accounts payable, look under the purchases command centre again and choose the Pay Bills option. This will allow you to record supplier payment- choose the account you want your payment to be recorded on. If it is a direct payment from your bank account (payment through credit cards or cheques), you can choose the pay from account option. If you want your payment to be grouped with a group of electronic payments, look for the Prepare electronic payment option under the Banking Command centre instead.

  1. Create Supplier Note

When it comes to purchase returns, you will first have to create a supplier note/debit note. To begin doing so, look for your Purchases Command Centre on your MYOB software. Choose enter purchases and look for the BILL field option. Make sure to enter the details of your purchase return and indicate negative amounts under the Bill section of the window that pops up for you. Once you are done with it, check to make sure everything is in order and record it.

  1. Apply Supplier Note

After creating your purchase return supplier note, you will now have to apply it to a purchase invoice that is still outstanding.  Look under the Purchases Command Centre and choose Purchases Register. Choose the tab that states returns and debits so that you can access your supplier note and choose the relevant supplier. You can then be able to locate the supplier you want to use and look for the PO# that you want to apply. Choose it and click apply to purchase so that you can apply it. You will then have to finalise it by choosing record.

These are some of the most crucial things to know about MYOB purchase orders. Make sure to practise and get acquainted with the procedures so that you can easily maintain data accuracy in your everyday projects!