Basic Accounting Questions
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Basic Accounting Questions From a recent question to
trez_talk.............
I am trying to prepare financial statements
for our club which has been operating for a year now. I have several
questions:
1. Should I capitalize the registration fees While a case could be made for capitalizing registration fees, the almost universal practice for investment clubs is to expense them when paid. 2. Are member's contributions considered capital or revenue Definitely capital!!!!! 3. Should the Income statement show only interest & dividends earned In addition to those items, the income statement would reflect club expenses, such as the registration fees, and capital gains and losses. Our club has also asked me to carry out an 'audit'of our books; what tips can you give for doing this. Well, the first tip is that you should not be the one to carry out an audit. That task should be performed by other members of the club who are not involved in the record keeping. After all the audit is of your records. For further information on audits, read Herb Barnett's document on the NAIC website. http://www.better-investing.org/clubs/verifying-books.html Now, I have a couple of questions for you. You are asking these questions now, but you say that you have been in operation for over a year. Did you file a partnership return (Form 1065) for the calendar year 1999. If not, you can be subject to penalties amounting to $50 per member per month up to a maximum of five months. Second question. Are you using either the NCA or bivio's accounting program? If not, these tools would make life much easier for you, and it would answer your questions as you go along, such as the one about are members' contributions income or capital. If you have any more questions on this, please do not hesitate to come back. Thank you for using bivio. Rip West Ridgway, CO trez_talk@bivio.com |
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