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September 2009

in this issue

Business Scenario
- Accounts Payable - Part 2


Accounting Tip

Did You Know ?


Sandy's Recommendations

Next Issue - GST

Upping Coming Issues


about e-ccounting

e-ccounting is a monthly newsletter focusing on accounting tips and solutions. Our mission is to educate our clients, students and readers by offering these resources in response to your ongoing questions.

It is our objective to gather information and provide easy access for your current and future needs.
Back-issues are available on the accountrain website.

These tips are not complete answers to complex questions. We therefore recommend, when in doubt, contact the professionals or government agency.

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accountrain specializes in the how's and why's of accounting.

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Please forward this to anyone you feel may benefit from some free accounting tips. They'll be glad you did.

Sandy's Question Corner

Do you have an accounting question? Send it to us at accountrain


accountrain is now offering a series of three workshops. Take one, two or all three and save as you learn. The informative and interactive format guarantees a comfortable and fun learning environment.

Details on the accountrain.com website.

The Topics:

1. Understanding How to Read Financial Statements
  • Who's interested in your reports and why
  • Why there's more to the Income Statement than just the "bottom line"
  • What's so important about the Balance Sheet, and
  • Key accounts, definitions, ratios and samples to review.

2. Accounting 101 - for new and small business
  • Review of common questions, including GST, incorporating and many more
  • Choices for maintaining bookkeeping
  • Understanding government requirements
  • Shortcuts, tips and organizing all that paper!

3. Year-end Prep & New Year Planning
  • It's never too late to get organized
  • Understand what's different including: depreciation, accruals, deferred revenue and prepaids
  • How to choose accounting help
  • Preparing for an audit, and how about avoiding an audit!
  • Learn to streamline your bookkeeping methods to save time and money.

4. Spreadsheet Bookkeeping
It doesn't have to be so complicated!
  • Review the 5 key elements to track
  • Discussion on what to expense and how to record them properly, including home and car usage
  • Learn how it ties into your annual Income Tax return
  • Leave with a working spreadsheet for your business

Next Sessions: Fall 2009 or as requested.

Limited seating, for more information on each workshop, upcoming dates or to register email accountrain

If you would like to see your ad here contact accountrain for more information about advertising in e-ccounting.

Free Seminar: Does your business have a will?
Presenter: Bruce Collie, CGA, consultant - Investors Group Financial Services
When: Thursday October 15, 2009, 7:00-9:00pm, Suite 150-40 Hines Road Kanata Ontario
What's covered: smart ideas to protect your equity and formulate an 'exit' strategy.
Target audience: small business owners and proprietors
Contact: Bruce.Collie@investorsgroup.com or (613) 591-7639 to enroll and for more particulars

  • Business Scenario
    - Accounts Payable - Part 2

  • What's the best way to handle / record vendor activity?

  • Answer
  • Vendor / supplier activity when dealing with receiving bills and issuing the payment / cheque (at a later date) are known in accounting as your Accounts Payable (A/P).

    Component 2 - Issuing the Payment / Cheque

    When you choose the Payments screen, it is divided into two sections; (a) general information including:

    • Vendor name
    • Payment number (which can be the cheque number, transfer number, etc.).
    • Date of the payment

    and (b) the bookkeeping portion of the screen which will only require you to choose what items you are paying for. Note the full amount of each bill will default, but you may over-ride this and enter a partial payment.

    Once you have completed the screen, if all the required fields have been entered you will post the entry. At this point all your reports will be updated.

    There are two main reports available:

    At any requested date, the report will itemize each vendor who you have an outstanding balance with and how much you owe, as well as a grand total at the bottom. The report has a current column, over 30 days, over 60 days and over 90 days columns to track the aging of these outstanding balances.

    At any giving date, you may request the specifics of one particular vendor. This report will provide each bill and payment therefore including both paid and unpaid items.

    Hint - when paying bills in other currencies, it is best to pay via a wire transfer or money order as the rate changes daily. If the initial bill was entered for an amount that has now been altered re the currency exchange, either the original bill can be adjusted to match, or an additional entry can be created with the difference being applied to an account called "Exchange on foreign currency". If this is a rare occurance, it can also be coded to the Bank Charges expense account, with an explanation.

  • Accounting Tip
  • If you are having cash flow issues and can not pay your suppliers, it is best to be pro-active and inform them. Pay a portion of the outstanding bill / balance to show good faith or request a payment plan that you can commit to.

  • Did You Know ?
  • Often, especially when you are starting your business, or setting up an account with a new vendor, they will request a deposit. For example Hydro.

    Did you know that after several months of paying your bill and thus building good credit, you can request the deposit back.

    Each vendor's policy will be different, so ask them when you can get it back and follow-up when the time comes (most of them will not just hand it over without a call / request from you.)

    For more Did You Knows?
  • Definition
  • Internal Controls

    The definition below is geared towards a large company, but there are ways to fine-tune this process for small business as well.

    "A variety of checks against abuse are usually present to prevent embezzlement by accounts payable personnel. Separation of duties is a common control. Nearly all companies have a junior employee process and print a cheque and a senior employee review and sign the cheque. Often, the accounting software will limit each employee to performing only the functions assigned to them, so that there is no way any one employee - even the controller - can singlehandedly make a payment. Some companies also separate the functions of adding new vendors and entering vouchers. This makes it impossible for an employee to add himself as a vendor and then cut a cheque to himself without colluding with another employee. This file is referred to as the master vendor file. It is the repository of all significant information about the company's suppliers. It is the reference point for accounts payable when it comes to paying invoices."

    quote from Wikipedia - under definition of Accounts Payable

    For more definitions ...
  • Sandy's Recommendations
  • Once a vendor's bill has been paid in full, you should get into the habit of filing it as soon as you can, to avoid your paper from piling up and the risk of losing anything. (lost papers could cost money, if you're audited and can't produce back-up, it takes time to hunt down copies or if the back-up can not be found, the expense will most likely be reversed.)

    Hints for a simple filing system, which is basic, yet works well in either small or large business:

    • For repeat vendors, each should have their own file, filed alphabetically, with the most recent paper work on the top.
    • For vendors that are one-timers or very seldom, a miscellaneous file is sufficient. Perhaps one file will become too cumbersome, therefore consider a Miscellaneous file for A-G and H-N, etc.
    • Seeing as staff are not considered vendors, for any travel or reimbursement of expenses, it is suggested each staff have their own file, which can all be filed at the front or back of the vendor files.
    • File your government paper work at the back of your files, ie a file for PST, GST, Source Deductions, Taxes, etc.
  • Next Issue - GST
  • Yes, I have written about GST in an issue in 2007, but it is so important, I am writing about it again.


    • Who needs it and when YOU should register.

    • How to obtain a GST number.

    • Hints on basic bookkeeping and how to fill out the government form.

    • Advantages and disadvantages of having a GST number.
  • Upcoming Issues
  • Here's a glimpse at some topics for upcoming issues, if you have any suggestions, send them to us at accountrain accountrain@magma.ca:


    • Reports
    • Payroll
    • Capital (Fixed) Assets
    • Inventory

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