Posts Tagged ‘accounting’

Embezzlement is…

Monday, July 25th, 2011

Embezzlement is taking something for personal gain that you’re supposed to be looking after for someone else.

It often happens in small amounts over time, and can sometimes go undetected for years. This is why accounting is so important – and why we need watchdogs like the U.S. Securities and Exchange Commission (SEC) to growl at offenders.

Examples of embezzlement include someone in charge of a trust or an investment fund snagging some of the money in their care, or those at the head of a nonprofit tweaking the books so that everything looks normal… while dollars secretly slip out the back door.

Accounts Receivable is…

Wednesday, May 18th, 2011

Accounts receivable (A/R) is an accounting term that refers to money someone owes to a store or business. If you buy something from a store, but don’t pay them right away – the amount that you owe goes into the store’s accounts receivable record.

Most large companies have an entire accounts receivable department that is solely focused on keeping track of money owed to the company.

Holding Charities Accountable for Their Accounting

Wednesday, May 4th, 2011

schoolboys-afghanistan.jpeg
(photo credit: isafmedia)

“People like to read the books,” says Daniel Borochoff, president and founder of the American Institute of Philanthropy in Chicago. “But the expense statement tells a story, too. Not as entertaining, but perhaps just as revealing.”

This seems like an appropriate follow-up to yesterday’s post about operational costs… A prominent organization dedicated to building schools and increasing access to education in Afghanistan – the Central Asia Institute – has recently gotten some bad press about its alleged money mismanagement.

Well, not money mismanagement exactly… more like financial nondisclosure. State auditors, donors, and charity ratings organizations have been surprised to find that more than half the CAI’s annual budget was spent in the U.S. instead of being sent overseas to pay for bricks and pencils.

Now, no one’s being accused of embezzlement – but it does seem like, at the very least, the organization’s finances were pretty incompetently handled. This is a great example of why it’s so important to do your homework before you give. Most charities are required to make their financial statements public, and you can use sites like GuideStar.org to help you get a better picture of where a nonprofit’s money is really being spent.

It’s also a pretty good example of how important it is to be on top of your finances. Even if you’re a great person (or organization), someday you’re going to be held responsible for the money coming in and going out of your account. SPEND.GROW.GIVE. will help you keep track, but you can get involved by setting a budget and sitting down with your advisor to talk about where you want your money to go.

Accounting is…

Monday, November 16th, 2009

Accounting is the process of maintaining and keeping track of financial records and transactions.

A Receipt is…

Tuesday, October 27th, 2009

A receipt is a written or printed record that shows that something has been paid for or goods have been received. When you pay for something in a restaurant, you receive a receipt that typically tells you what you ate and how much it cost.

Gross Profit is…

Monday, August 17th, 2009

Gross profit is an accounting calculation of expenses subtracted from total sales.  In other words if a company sold $100 worth of pencils in a month and it cost them $20 to manufacture, sell and pay for labor, then the gross profit is $80.

A Write-off is…

Monday, August 10th, 2009

A write-off is the cancellation of an asset or debt from an account because the asset is worthless or the debt can’t be collected. For example, if you own stock in a company that goes bankrupt, that stock isn’t worth anything anymore, even though you technically still own it. So you remove the asset from your account (since it’s basically just a waste of space now), and call it a write-off.

Accrual Basis is…

Wednesday, August 5th, 2009

Accrual basis is an accounting method in which you factor in profits and expenses as they are incurred, rather than after the money has actually changed hands. For example, say you sell your friend a laptop, and he agrees to pay you $1,000 next week. If you’re keeping your accounts on an accrual basis, you write down the $1,000 as income now, even though you won’t actually get the money until next week.