Week 6 Tutorials and Activities

[George Lewter]

This set of materials completes the course materials for the class. Though the formal class is ending, group members are encouraged to stay on as members, and to post new accounting questions that are bound to arise, and to answer questions by others. The materials will be opened up to the general membership after our last class, so there may be a flurry of questions. Please do not ask George to take all of them on.

By now you should not be at a loss when you think about how to go about tracking the transactions that are commonly occurring with your business. We have not covered all of the activities that you may need to include in your books, such as sales tax, and payroll if you have employees. Payroll is beyond the scope of our introduction to accounting.

The Web site http://www.ehow.com/how_6066826_account-sales-tax.html offers the following concise plan for accounting for sales tax.

1. “Add the sales tax to the cost of equipment you purchase for your business. For instance, if you buy a cash register for $200 and must pay 8 percent in sales tax ($16), record the cost of the cash register on your books as $216. You do not need to distinguish purchase price from sales tax in your books.
2. Depreciate the asset as normal, treating the value of the asset as the purchase price plus sales tax. For instance, you should depreciate the cash register as if its value is $216 rather than $200.
3. Include the sales tax you charge customers as income in your gross receipts only if your state imposes sales tax on you (the merchant) rather than on the customers. If the state requires that you collect sales tax imposed on the buyer, the price you charge should be recorded on the books without sales tax, and the amount collected as sales tax should be recorded as a liability.
4. Remit sales tax to your state on the appropriate schedule set up by your state. If sales tax is imposed on you (the merchant), record sales tax as an expense. If sales tax is imposed on the buyer and you are required to collect it on behalf of the state, offset the entry you made in the liabilities section.”

Read more: How to Account for Sales Tax | eHow.com http://www.ehow.com/how_6066826_account-sales-tax.html#ixzz1sdZRaCij

There are several more activities you do need to know about to generate accurate current reports on your business’ health.  These involve closing out your books for a given period of time.  You have to do this at the end of the year for your tax reporting, but it really should be done every month or two so you know how your business is doing. For a rundown of the procedures, read the articles at:

http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_1500

http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_1530

You will find that some account balances such as revenue and expenses will be transferred to Owner's Equity, to start out the new period with a zero balance.  

 

Finally, if you want to learn more about different categories of business management, the beancounter site has more tutorials to look through at:

http://www.dwmbeancounter.com/moodle/course/index.php

[Wes Stack]

Thanks George for organizing the course and keeping us at it. I got everything I needed from our activities and discussions, and more.

On another matter. Somehow my logo seems to come up in almost every group's reply box. Don't know how it got there, but it appeared just after I uploaded my logo. Hopefully there is a way to get rid of it. Let me know if I need to do something, or if you, as admin, can fix, it I'd appreciate it.

Wes