Accounting Best Practices, 3rd Edition - womlib.ru

1 AccountingBest PracticesThird 7/31/03 8:45 AM Page iAccountingBest PracticesThird EditionSteven M. BraggJohn Wiley & Sons, 7/31/03 8:45 AM Page iiiThis book is printed on acid-free paper. Copyright 2004 by John Wiley & Sons, Inc., Hoboken, New Jersey. All rights simultaneously in CanadaNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning,or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorizationthrough payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc.

2 ,222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-750-4470, or on the Web at Requests to the Publisher for permission should be addressed to thePermissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030,201-748-6011,fax of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect tothe accuracy or completeness of the contents of this book and specifically disclaim any impliedwarranties of merchantability or fitness for a particular purpose.

3 No warranty may be createdor extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professionalwhere appropriate. Neither the publisher nor author shall be liable for any loss of profit or anyother commercial damages, including but not limited to special, incidental, consequential, orother general information on our other products and services, or technical support, please contact our Customer Care Department within the United States at 800-762-2974, outside the United States at 317-572-3993 or fax also publishes its books in a variety of electronic formats.

4 Some content that appears inprint may not be available in electronic more information about Wiley products, visit our Web site at of Congress Cataloging-in-Publication Data:Bragg, Steven best practices / Steven M. Bragg. 3rd 0-471-44428-6 (CLOTH)1. Accounting . I. 2003657 dc212003006629 Printed in the United States of 7/31/03 8:45 AM Page ivMany capabilities originate through the direct assistance of parents in one s childhood. In my case, reading with the voraciousness of a predator came from my parents,one of whom tirelessly read books to me as a toddler,while the other constantly expanded my vocabulary withmandatory definition reviews from the dictionary.

5 I also picked up a few especially choice words whenever mydad banged his thumb with a hammer. Mom and Dad,thank you once 7/31/03 8:45 AM Page vviAbout the AuthorSteven Bragg, CPA, CMA, CIA, CPIM,has been the chief financial officer orcontroller of four companies, as well as a consulting manager at Ernst & Youngand auditor at Deloitte & Touche. He received a master s degree in finance fromBentley College, an MBA from Babson College, and a bachelor s degree in eco-nomics from the University of Maine. He has been the two-time president of the10,000-member Colorado Mountain Club, and is an avid alpine skier, mountainbiker, and rescue diver.

6 Mr. Bragg resides in Centennial, Colorado. He is the author of AdvancedAccounting Systems(Institute of Internal Auditors, Inc., 1997), and the followingbooks from John Wiley & Sons, Inc.: Accounting and Finance for Your Small BusinessAccounting best PracticesAccounting Reference DesktopBusiness Ratios and FormulasThe Controller s FunctionControllershipCost AccountingDesign and Maintenance of Accounting ManualsEssentials of PayrollFinancial AnalysisGovernment Accounting best PracticesJust-in-Time AccountingManaging Explosive Corporate GrowthThe New CFO Financial Leadership ManualOutsourcingSales and Operations for Your Small 7/31/03 8.

7 45 AM Page viContentsPrefaceviiiChapter 1 Introduction1 Chapter 2 How to Use best Practices4 Chapter 3 Accounts Payable best Practices17 Chapter 4 Billing best Practices66 Chapter 5 Budgeting best Practices87 Chapter 6 Cash Management best Practices110 Chapter 7 Collections best Practices128 Chapter 8 Commissions best Practices154 Chapter 9 Costing best Practices167 Chapter 10 Filing best Practices184 Chapter 11 Finance best Practices206 Chapter 12 Financial Statements best Practices225 Chapter 13 General best Practices253 Chapter 14 General Ledger best Practices290 Chapter 15 Internal Auditing best Practices308 Chapter 16 Inventory best Practices325 Chapter 17 Payroll best Practices346 Appendix A Summary of best Practices376 Index389viiIMPORTANT NOTE:Because of the rapidly changing nature of information in this field, this prod-uct may be updated with annual supplements or with future editions.

8 Pleasecall 1-877-762-2974 or e-mail us at to receiveany current update at no additional will send on approval anyfuture supplements or new editions when they become available. If you pur-chased this product directly from John Wiley & Sons, Inc., we have alreadyrecorded your subscription for this update 7/31/03 8:46 AM Page viiPrefaceThe Accounting department is a cost center. It does not directly generate revenues,but rather provides a fixed set of services to the rest of a company, and is asked todo so at the lowest possible cost.

9 Consequently, the Accounting staff is calledupon to process transactions, write reports, create new processes or investigateold ones while doing so as an ever-shrinking proportion of total cost-based environment is a very difficult one for most accountants, fortheir training is primarily in Accounting rules and regulations, rather than in howto run a very specialized department in a cost-effective manner. They find a fewideas for improvements from attending seminars or perusing Accounting or man-agement magazines, but there is no centralized source of information for them toconsult, which itemizes a wide array of possible improvements.

10 Hence the needfor the third Edition of Accounting best book is compiled from the author s lengthy experience in setting up andoperating a number of Accounting departments, as well as by providing consult-ing services to other companies. Accordingly, it contains a blend of best practicesfrom a wide variety of Accounting environments, ranging from very small part-nerships to multibillion-dollar corporations. This means that not all of the bestpractices described within these pages will be useful in every situation someare designed to provide quick and inexpensive, incremental improvements to anoperation that can be installed in a day, while others are groundbreaking eventsthat require six-figure investments (or more) and months of installation will only work for companies of a certain size, and should be discarded asmore expensive and comprehensive Accounting systems are installed it all dependson the situation.