Accounting
Accounting Treatment Inquiry on Indirect Costs Included in Inventory: Discussion on Account Classification Before Profit and Loss Carry-Forward
An ERP functional consultant (without accounting background) raises: In fiscal year 2019, purchased goods had direct costs of $100 and indirect costs of $20, posted to both income statement and balance sheet accounts. If goods remain unsold at year-end, is it compliant to retain the $20 indirect cost on the income statement? This article explains cost recognition principles and recommends transferring indirect costs to inventory-related balance sheet accounts.
SEC Reporting Requirements for Floating NAV Changes in Prime Money Market Funds
A treasury department employee, preparing to invest in Prime Money Market Funds, asks about SEC reporting requirements for changes in the Floating NAV (FNAV). Despite searching the SEC website, they have not found guidance. Historically, they have recorded FNAV changes (positive or negative) as interest income or expense, but doubt this accounting treatment's correctness.
Career Development Advice: Finish Remaining Exams or Seek Employment Quickly?
A trainee chartered accountant, after being made redundant, faces the choice of whether to finish remaining exams before job hunting. He worries that a 7-8 month gap might affect future employment, but he can also support himself financially. Forum members offer advice.
Design Cost Accounting: Exploring the Path from Traditional Costing to Activity-Based Costing
A business operator, lacking a background in management accounting, encountered the issue of how to include design costs in the final product price when building an accounting system. Traditional functional costing only covers direct labor, direct materials, and manufacturing overhead, making it difficult to allocate design costs. The article analyzes the reasonableness of activity-based costing as an alternative and confirms that its direction is correct.
CIMA Exam Preparation: Full-Time Year Off or Slow Progress While Working?
Suzy, who holds a bachelor's degree in chemistry and has worked as a finance assistant for two years, struggles to balance work and CIMA exam preparation after being diagnosed with ME, passing only one exam in a year. With sufficient savings, she is considering taking a full year off to concentrate on the remaining 16 exams and hopes to seek advice from senior accountants and financial controllers.
Can External Brand Development Costs Be Capitalized? A Consulting Case Analysis for a Dairy Startup
A dairy startup recently invested significant funds in hiring consultants to develop brand identity and other elements, asking whether these external costs can be capitalized. Based on current accounting treatment principles, this article distinguishes between internal and external costs, points out that external costs involve more gray areas, and provides practical references.
Balance Sheet Handling: How to Record Business Vehicle Purchase Entries?
A business owner encountered confusion when recording a vehicle purchase in QuickBooks: the total vehicle price was $25,000, with $7,000 paid from startup funds and $18,000 from a bank loan. This article explains the correct entry method for this transaction on the balance sheet, ensuring assets and liabilities are accurately reflected.
Year-End Inventory Valuation: A Practical Guide for Bookkeepers of New Franchisees
A bookkeeper of a new franchisee encountered difficulties in valuing inventory at year-end. They faced three core facts: a refundable inventory deposit paid to the franchisor, royalties paid as a percentage of sales (including restocking fees but without details), and no physical inventory count at year-end. Based on these facts, this article explores possible accounting methods and emphasizes the importance of professional judgment and consultation.
Homeowners Association (HOA) Audit Verification Request
The author plans to conduct an audit of a Homeowners Association (HOA) and found a related article, requesting confirmation of whether the article's content is accurate. The article link has been provided.
Why are reimbursements not directly offset against expense accounts?
An HOA treasurer with a business degree but not an accountant is puzzled by the organization's practice of recording third-party reimbursements separately from expenses in different line items, and also keeping the tennis court loan repayment as a separate account. This article explores the potential reasons behind this bookkeeping approach, points out the confusion it may cause, and provides professional advice.