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Costing and Inventory Valuation


Sooner or later all new entrepreneurs ask themselves: Why is costing necessary?

Cost analysis is vital for businesses because entrepreneurs cannot optimize expenses unless they clearly understand what they consist of and which business performance indicators will be impacted by the changes and which will not.

Costing is needed to valuate inventory objectively, determine the wholesale and retail prices, calculate and control the return on sales (ROS) of each specific item.
Knowing the unit cost, you can easily determine the required/minimum acceptable markup for the selling price to reach the projected profits.

One of the key factors contributing to accurate financial reporting is the correct inventory valuation. Inventory is considered to be short-term assets, and as working capital it should be valuated based on its acquisition cost.

Why is the cost generally not equal to the latest purchase price?

Current stock may include goods purchased at different times at

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Tags: inventory, warehousing, accounting, business, PayTraq U

Supply Сhain Management. Arranging Your Sales & Procurements

Depending on the requirements and specifics of your business, PayTraq offers a variety of options for your sales and procurements arrangement and planning. You can choose an option according to your specific business process or take advantage of its modified versions.

Below are some of the most commonly used sales and purchases workflows.

1) Sales if the product is in stock

(Sales Order) -> Invoice to Customer -> Outgoing Shipment

It is used to sell products which are available in stock.
The easiest and the most common way for selling a product is when the sales order is created, based on which then an invoice is issued.

An outgoing shipment from the warehouse is generated in the program automatically when the invoice is posted.

A simplified alternative of this workflow is when the invoice is issued right away, without the sales order being created.

For advance payment sales,

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Tags: automation, business, warehousing, PayTraq U

Counterparty in bookkeeping. Who are debtors and creditors? How to work with them?

Most of the business operations recorded in books require the indication of the other party of the transaction – counterparty.

Counterparty is a third party entering into any contractual relationships with your company. These relationships are somehow related to the company’s business activity, for example, services received or provided, goods purchased or sold, incurrence of financial commitments, payroll accounting, cash inflow or outflow, etc.

Based on the operation, a counterparty can be your customer, vendor, employee, bank, or tax agency.
Records are kept individually for each counterparty, for this reason, the counterparty shall be indicated in the accounting entries.

Separate counterparty accounting allows to find out at any time who owes you and how much they owe you, as well as whom and how much you owe, to reconcile payments with a counterparty at any date to confirm the amount due, and to get a counterparty’s account statement over

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Tags: PayTraq U, 101, accounting

General Journal and General Ledger

When someone unfamiliar with modern accounting faces such terms as "general ledger" or "general journal", they imagine giant dusty books, complicated and totally confusing. Of course, such vision of modern accounting is absolutely wrong. Meanwhile, the general ledger is essential for any company’s accounting system.

Historically, journals and ledgers were constantly bound notebooks in which a clerk hand wrote entries right after a sale was closed, a cost become incurred, revenues were received, or any other event took placed that affected the company's records.

Nowadays, of course, journals and ledgers are completely implemented in accounting software. As a result, transaction data are entered manually through onscreen forms or even more often automatically (through bank feeds, point of sales systems). Moreover, software automatically register journal entries to ledger so the don’t need to be transferred manually.

The general journal is a list of all business

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Tags: PayTraq U, 101, accounting

Debit and Credit in Accounting Entries: Is It So Complicated?

Most people know debit and credit outside the context of bookkeeping.

Bank cards, for instance, are commonly used almost by everyone. There are debit and credit payment cards. The former allows us to spend money directly from our current account; credit cards, on the other hand, offer an opportunity to use a bank credit line, thus giving a free hand to spend borrowed money. Debit in this context is the money received from the bank account, and credit is the money available on a bank loan.

Debit and credit are also commonly known through the bank statement where the write-off amounts are specified in the debit column, and the charged amounts are indicated in the credit one.

Nevertheless, bookkeeping double entry implies a different role and idea of debit and credit.

For you to use debit and credit to trace economic operations under various types of business accounting records, you

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Tags: accounting, PayTraq U, 101

What bookkeeping is and why it is important for business?

Bookkeeping has been in existence in one form or another for many years. It appeared approximately when people started trading.

Bookkeeping makes sense because, if we want to run a business in an orderly manner, we need a certain system of records to help us properly trace and regulate business transactions.

Bookkeeping can be defined as a regulated system for the collection, registration, and consolidation of information expressed in terms of money about the assets status, the company’s commitments and their changes (flow of funds) by comprehensive, continuous, and documented accounting of all economic operations.

In simple terms, bookkeeping is the recording of all operations someway related to the company’s field of business.

Initially, bookkeeping was established by Luca Pacioli, an Italian friar and mathematician who lived at the turn of XV-XVI centuries. When a child, he assisted a merchant in trading record keeping, which subsequently became his

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Tags: accounting, PayTraq U, 101

Understanding a Balance Sheet

Why do we need to understand a Balance Sheet?

A Balance Sheet (also known as Statement of Financial Position) is one of the three primary financial statements (along with the income statement and statement of cash flows) showing the company’s financial condition at a specific point in time. Unlike the income statement which shows the performance of a company over a period of time, the Balance Sheet shows the business’s current financial position.

A Balance Sheet enables you to analyze and evaluate the financial health of your business and share this information with others, such as your current or potential investors, lenders, and other persons outside the business who need to stay informed about the business’s financial affairs.

Business managers and anyone thinking of becoming an entrepreneur and starting a business should know how to understand financial statements and the accounting methods used to prepare them. With

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Tags: business, PayTraq U, Financial statements

Profit and Loss Statement

Financial statements contain substantial information about your company's operating results and financial position. The profit and loss statement (P&L) and the balance sheet are the two basic financial reports that give you this information. Taking the time to better understand these reports will give you more control and a clearer picture of your business and how it’s performing. If you were putting your P&Ls away without reading through them, you are not on your own. However, getting a grasp on your P&L is crucial to knowing how to operate your business efficiently.

Almost all entrepreneurs start businesses because they are excited about the main work of the business - which probably isn’t accounting. Therefore most entrepreneurs aren’t fully at ease interpreting the regular monthly financial statements they receive.

There are countless entrepreneurs who never view their profit and loss statements because

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Tags: business, PayTraq U, Financial statements

What is an account in accounting?


If we are referring to an account with regard to accounting, then it carries a completely different meaning compared to what the majority of people are accustomed to. The use of the word account generally sparks ideas of an account with a bank. In the world of business, account could relate to a customer. Under this meaning, an account is another entity or person for whom a business acts as a supplier, and with whom there may be an outstanding accounts receivable balance.

These two concepts are correct, however in accounting the word account represents an entirely different meaning.

The word account in everyday language is also used as a substitute for an explanation or a report of certain actions or events. In order to explain or to report, you will, of course, have to remember what you were doing or what happened. As it is not always easy to

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Tags: accounting, PayTraq U, 101

What is a Chart of Accounts?


Any time you are establishing an accounting structure for your business, a chart of accounts is among the first things you will need to put in place to get your bookkeeping up and running.

Fortunately, with an outstanding web-based accounting system, establishing your chart of accounts is simple to perform, and in no time, you will be on the road to setting up your company’s financial records!

Before we discuss just what you’ll find in a chart of accounts, we have to answer these questions - what, exactly, a chart of accounts is and why it’s so important.

A chart of accounts is an ordered listing of the names of the accounts that a company has identified and made available for recording transactions in its general ledger. Each financial transaction is assigned to a specific account. For example, a business needs and should want to know where

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Tags: accounting, PayTraq U, 101