Bookkeeping Blunders and Errors -- One Should Take Care
By: vish ks
Submitted: 2010-01-28 04:43:36 | Word Count: 546
As the financial year comes to a close, many accountants, CPA’s and bookkeepers will find that their anxiety levels are increasing at a faster rate. Within a few weeks’ time itself, these bookkeeping personnel might come across bookkeeping errors in some of their business clients' books. Errors have got the potential to break a business owner’s back by having to pay too much in terms of taxes or too little. But, at a later stage, they will come under the tax authority’s scanner. This means that they will be required to pay a fixed amount as penalty for not sticking to the norms. This definitely will lead to the conclusion that the business owner had not been able to effectively manage the financial aspects of his business.
It is fortunate that most of the common bookkeeping blunders are uncomplicated enough to be fixed as soon as they are found. If you know what all entries constituted error and what all are the simple steps to be taken to rectify them, the problem can be solved without any complications. One of the common bookkeeping blunders is that some new and small business owners are of the belief that no accounting system is needed for conducting their business operations and they can manage it on their own. The greenhorn business owner sometimes also pretends he or she can make it without relying on a real accounting system.
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Instead of maintaining a real bookkeeping system these business owners would simply collect receipts and would keep a check register. But it is a fact that the absence of a no nonsense system is vital to know about the different statistics, and the ‘no accounting system’ does not quite work well always. At the time of your tax return, someone with a little experience would have made some sort of a make-shift bookkeeping system. Such kinds of bookkeeping practices do not augur well as it is almost certain that it will not be able to include all the data required. And, the information and indications that this crude system deliver will not be up to the mark so as to help one in running one’s business in a better way.
Another common error is the delay made in entering bookkeeping data; one has to make it up to date at all times. Whoever that does your accounting assignment should keep up to date records on all the fronts of bookkeeping as well as data entry. Within a fraction of seconds of the transactions actually taking place, the bookkeeping system should reflect that particular activity. Also one has to reconcile one’s bank accounts as the month draws to a close and when the bank statement arrives. In addition to that, if you are in possession of other valuable assets like inventory, you should make accurate comparisons regarding what the bookkeeping system says to the actual physically made statements with the help of an external source. If one performs all the checks on key accounts regularly, particularly that of cash, it can clean up all sorts of bookkeeping errors.
