creating an accounting system for your vei firm presented by: nick chapman, national program...
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Creating an Accounting System
for your VEI FirmPresented by: Nick Chapman, National
Program DirectorSummer 2015
An Overview of the VEI Programveinternational.org
General accounting practices in the Virtual Enterprise
• Prepare a budget• Keep records of all transactions
o Using the accounting journals• Oversight & Internal Controls• Using the Webinars• Using the journals to prepare financial
statementso Cash Budgeto Income Statemento Balance Sheet
• Year-end reporting using the Firm Financial Data Form
An Overview of the VEI Programveinternational.org
Financing the Enterprise
• Debt vs. Equity Financing• Non-VE Sales• The Balance Sheet
http://prezi.com/4b0mpbgw-ccx/the-balance-sheet/?utm_campaign=share&utm_medium=copy
COMPLETE THE BUSINESS REGISTRATION FORM TO APPLY FOR STARTUP FUNDING
VEI PORTAL / SUBMITTAL FORMS
An Overview of the VEI Programveinternational.org
The Balance SheetAssets
CashAccounts ReceivableFixed Assets
Computers/Equipment/Furniture
______________________________________
LiabilitiesAccounts PayableLoan Payable
Shareholders’ EquityCommon StockRetained Earnings
An Overview of the VEI Programveinternational.org
Financial StatementsCash Budget – a record of when money comes in and out of the account
(Cash basis of accounting)
Income Statement – a statement of earnings that books when revenues or expenses occur
(Accrual basis of accounting)
Balance Sheet – what your financial position looks like on a given day in time
(Statement of financial position)
An Overview of the VEI Programveinternational.org
Description FY 2013-2014 TOTALSCash balance at beginning of period: Receipts of cash: Sales Receipts of accounts receivable Loan proceeds Other Total receipts 0Beginning balance + cash receipts 0Payments: Cost of merchandise (wholesale marketplace)Salaries (net pay on payroll register)Accounts payable Rent (regional office)Advertising/ promotion (other VEI firms)Payroll tax (from payroll register & 941 form)Insurance (other VEI firms or regional office)Accounting and legal fees (other VEI firms or regional office)Utilities (other VEI firms or regional office)Loan Payment (loan payment table)Pension, 401(k) (from payroll register + emp. cont.)Freight out (have you researched shipping fees?)Sales tax VEI Sales Tax is 7% of sales (Nationally)Other or miscellaneous Corporate tax (paid at the end of the year)Total payments 0Cash balance at end of period 0Net increase or decrease in cash 0
Cash Budget
Cash vs. Accrual
Cash – Cash BudgetMonth 1 2 3
Receipts
Cash Receipts
1,500 0 3,500
Payments
Insurance 1,000 0 0
Utilities 4,750/8 4,750/8
…
Accrual – Income Statement
Month 1 2 3
Revenues
InternetSales
2,000 2,000 2,000
Expenses
Insurance
1,000/12
1,000/12
…
Utilities 4,750/12
4,750/12
…
•For another explanation, visit the Khan Academy:https://www.khanacademy.org/economics-finance-domain/core-finance/accounting-and-financial-stateme
When the money is received or paid When the transaction takes place or when a service is used
Utilities= $4,750 for 12 months of use, payable in 8 monthly installments
An Overview of the VEI Programveinternational.org
Income StatementFor the period May 1, 2014 – April 30, 2015
Revenue- Cost of Goods Sold
Gross Profit- Total Operating Expenses
• Provide details
Income from Operations- Corporate Tax
Net Income After tax
“Statement of Earnings”•What is your projected revenue?•Projected operating expenses?•How much profit or loss does your firm project to have this year?GROSS MARGIN %:Gross Profit/ Revenue = Gross Margin•The % of revenue that you keep after COGS.
PROFIT MARGIN %:Net Income/Revenue = Profit Margin•The % of revenue that you keep after all expenses and taxes.
An Overview of the VEI Programveinternational.org
OCT NOV DEC JAN FEB MAR APR TOTALSales revenues
Source of Sales (ex. Online) 0Source of Sales (ex. Trade Show) 0Source of Sales (ex. Non-VE Sales) 0
Total sales revenues 0 0 0 0 0 0 0 0
Cost of goods sold or services provided
What is your firm’s Gross Margin?Apply the gross margin to your sales to determine COGS 0
Gross profit 0 0 0 0 0 0 0 0
Operating expenses
Salaries “Gross Pay” from Payroll Register 0Rent From your lease 0Depreciation Taken from the Asset Log 0Payroll tax 7.65% of Gross Pay (this is the firm’s contribution to Social Security & Medicare) 0Advertising 0Promotion 0Insurance Total amount of the insurance policy divided by 12 months (ACCRUAL) 0Pension or 401(k) Taken from the Payroll Register 0
InterestThis is only the interest portion of your loan payment (Found on the Amortization Table) 0
Supplies 0Utilities 8 monthly payments based on 12 months of use 0Other 0
Total operating expenses 0 0 0 0 0 0 0 0
Income from operations 0 0 0 0 0 0 0 0Other revenues/gains and expenses/losses
Net income before taxes 0 0 0 0 0 0 0 0Corporate income tax ONLY OWED IF NET INCOME IS POSITIVE!!! Net income after taxes 0 0 0 0 0 0 0 0
Income Statement
Taken from Sales Journal
An Overview of the VEI Programveinternational.org
Balance Sheet
ASSETS
LIABILITIES
SHAREHOLDER’S
EQUITY
= +
An Overview of the VEI Programveinternational.org
The Balance Sheet
Assets
Current AssetsCash From Bank AccountInvestments in stocks Accounts receivable From Sales Journal/Acc Rec.Merchandise inventory From Inventory LogSupplies Estimate
Total Current Assets -
Fixed AssetsComputers Original ValueLess: accumulated depreciation
How much value has it lost over its life?
Furniture and fixtures Original ValueLess: accumulated depreciation Office equipment Original ValueLess: accumulated depreciation
Total Fixed Assets 0
Total Assets 0
Liabilities and Stockholders' Equity
Current LiabilitiesAccounts payable Who do you owe?Sales tax payable Sales Tax ReportingSalaries payable April Salaries?Payroll tax payable April Payroll Tax401(k) payable Other payable Corporate tax payable Did you make a profit?
Total Current Liabilities 0
Long Term Liabilities Loan payable Loan Payment table
Total Liabilities
Stockholders' EquityPaid-in capital
Common stock, $10 par value, * # shares issued Seed money
Additional paid-in-capital
In excess of par value Was your firm certified?
Retained earnings ”Plug” number
Total Stockholders' Equity 0
Total Liabilities and Stockholders' Equity
=
An Overview of the VEI Programveinternational.org
General accounting practices in the Virtual Enterprise
• Prepare a budget• Keep records of all transactions
o Using the accounting journals• Oversight & Internal Controls• Using the Webinars• Using the journals to prepare financial
statementso Cash Budgeto Income Statemento Balance Sheet
• Year-end reporting using the Firm Financial Data Form
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