La Diferencia Entre Interest Expense y Interest Payable

1.Interest expense es una cuenta del income statement cual es usada para reportar una cantidad de intereses incurrdos o deuda durante un periodo de tiempo.

2.Interest payable es una cuenta de current liability que es usada para reportar la cantidad de intereses incurridos pero que no han sido pagados a la hora de crear el balance sheet.

Para illustrar la diferencia de interest expense y interest payable, Asumamos que una compania tiene $300,000 de deuda con un interest de 8% por ano. La compania paga los intereses mensualmente como manda, cada 15 dias despues que el mes termina. El Prestamo comenzo en Enero 2 de ano corriente. Si la contabilidad del ano termina en Diciembre 31, la cantidad de interest expense por el ano sera de $24,000 ($300,000 x 8%). La cantidad de interest payable a Diciembre 31 seran los intereses de Diciembre $2,000 ($30,000 x 8% x 1/12). Los  interest payable de $2,000 seran reportados como un current liability por que se vence dentro de los 15 days de la fecha del balance sheet .

La Diferencia Entre Debt y Liability

What is the difference between liability and debt?

 
Algunas veces  liability y debt  significan lo mismo. Por ejemplo en la debt-to-equity ratio, debt es la cantidad total de las obligaciones( liabilities). En este caso, debt no solo incluye  short-term and long-term loans y bonds payable, debt tambien incluye salarios acumulados y utilidades, income taxes payable, y otros liabilities.En otras palabras, algunas veces debt aplica para toda obligacion…todo lo que se debe…toda obligacion.
En otras ocasiones,la palabra debt es usada para lo normal para contractos financieros escritos tales como prestamos a pagar a corto plazo (short-term loans payable), prestamos a pagar a largo plazo(long-term loans payable), y Bonos a pagar(bonds payable).
Tu pregunta es un recordatorio que las personas tiene diferentes perpectivas por consiguiente tienen diferentes  entendimiento y definiciones de la terminologia.

Es la porcion corriente de una deuda a largo plazo ajustada mensualmente ?

 

Un ajuste mensual de la porcion corriente de la deuda a largo plazo ( long term debt) es necesaria cuando:
1. La compania emite  balance de hoja mensuales (balance sheets), y
2. la cantidad a pagar en el balance principal del prestamo durante los proximos  12 meses es diferente de la cantidad mostrada en las obligaciones corrientes ( current liability).
La cantidad reportada como una obligacion corriente (current liability )mas la cantidad reportadacomo una obligacion a largo plazo  long term liability  debe ser igual a la cantidad total de la deuda(debt).

Que Es Una Cuenta Temporera En Contabilidad

Que es una Cuenta Temporera (temporary account)?

Al finalizar el ano de contabilidad(accounting year ) cualquier balance en la cuenta sera transferido a otra cuenta. Esto se conoce como cerrar la cuenta o closing the account. Un Ejemplo de una cuenta temporera es la cuenta de Ventas( Sales account). La cuenta de ventas es usada  para mantener un registro de las ventas solo del corriente ano.
Despues que las ventas del ano son reportadas, el balance de la cuenta de ventassera transferido o cerrada a otra cuenta regresando el balance asi a cero.Las Cuentas Temporeras incluye todas las cuentas de el  Estado de Ingresos o income statement. Cuentas comos: revenues, expenses, gains, losses. Despues que las cantidades han sido reportadas en el income statement, los balances en las cuentas temporeras terminaran en una cuenta permanente tales como las ganancias retenidas  de la corporacion (corporation’s retained earnings )o en una cuenta capital del propietario( sole proprietor’s capital account). (En los sistemas manuales, los balances de las cuentas temporeras seran transferidos a una cuenta de resumen de ingresos o income summary account. La cuenta de resumen de ingresos( income summary account) sera transferida a la cuenta de ganancias retenidas( retained earnings )o la cuenta de capital del dueno.Por consiguiente ,  la cuenta de resumen de ingresos es tambien temporera.
Una cuenta temporera que no es de cuenta de ingresos( income statement account) es la cuenta de retiro del dueno o proprietor’s drawing account. El balance la cuenta de retiro es transferida directamente a la cuenta de capital del dueno  y no sera reportada en el estado de ingresos( income statement o en la cuenta de resumen de ingresos..
Las cuentas temporeras se les conoce tambien como  cuentas nominales.

  Que una cuenta nominal en contabilidad?

Las Cuentas Nominales en contabilidad son las cuentas temporales, tales como las cuentas del income statement . En otras palabras, las cuentas nominales son cuentas que reportan ingresos(revenues), gastos(expenses), ganancias(gains), y perdidas( losses). (La cuenta de retiro del dueno es tambien una cuenta temporal, aunque esta no es parte del income statement ) Las cuentas Nominal o temporary accounts se cierran al finalizar el periodo de contabilidad anual. Esto significa que los balances son transferidos a una cuenta permanente. Este proceso de cierre permite empezar el proxomo ano de contabilidad con los balances en cero
Los balances de la cuenta del income statement terminaran en la cuenta de capital del dueno , si la empresa o negocio es de un solo propietario. Si el negocio es una corporacion, los balances terminaran en la cuenta de ganancias retenidas o retained earnings account.

Es la Depreciacion una cuenta temporera?

Los gastos por depreciacion (Depreciation Expense) es una cuenta temporera dado el hecho que es una cuenta del income statement. Como cuenta temporera, Los gastos de depreciacion Depreciation Expense empezaran en nuevo anao de contabilidad en cero y se cerrara su balance a una cuenta de equidad (equity account) tal como la cuenta de ganancias retenidas o cuenta de capital del dueno..
Por otra parte ,la cuenta de balance sheet como Accumulated Depreciation no es una cuenta temporera . La depreciacion acumulada(Accumulated Depreciation) es una cuenta contra los activos  y su balance no es cerrado al final del periodo de contabilidad. Como resultado, la depreciacion acumulada (Accumulated Depreciation )es vista como una cuenta permanente.

Explanation of Cost Principle-Accounting

Componenets of the asset side of the Federal Reserve System balance sheet from January 4, 2007 to September 25, 2008. This is the assets of all 12 Federal Reserve Banks combined as reported by the Federal Reserve. (Photo credit: Wikipedia)

Que es el principio de conservatismo?

El principio de conservatismo ayuda al contable ha decidir entre 2 alternativas .For example, if an item in inventory has a cost of $20, but it can be replaced for $15, the conservatism principle directs the account to report the item in inventory at $15 and to immediately report the loss of $5. For an asset such as inventory it means reporting the lower asset amount on the balance sheet and the lower net income amount on the income statement. From the conservatism principle comes the accountants’ the lower of cost or market rule for inventory valuation.The conservatism principle does not say that accountants are to be conservative. Accountants should be fair and objective. The conservatism principle is used to “break a tie” between two reasonable options. It is not intended to motivate accountants to beat down a company’s earnings and assets.

What is the cost principle?

The cost principle is one of the basic underlying guidelines in accounting. It is also known as the historical cost principle.
The cost principle requires that assets be recorded at the cash amount (or its equivalent) at the time that an asset is acquired. For example, if equipment is acquired for the cash amount of $50,000, the equipment will be recorded at $50,000. If the equipment will be useful for 10 years with no salvage value, the straight-line depreciation expense will be $5,000 per year (cost of $50,000 divided by 10 years). The equipment’s market value, replacement cost or inflation-adjusted cost will not affect the annual depreciation expense of $5,000. The company’s balance sheets will report the equipment’s historical cost minus the accumulated depreciation.

The cost principle also means that valuable brand names and logos that were developed through effective advertising will not be reported as assets on the balance sheet. This could result in a company’s most valuable assets not being included in the company’s asset amounts. (On the other hand, a brand name that is acquired through a transaction with another company will be reported on the balance sheet at its cost.)
If a company has an asset that has a ready market with quoted prices, the historical cost may be replaced with the current market value on each balance sheet. An example is an investment consisting of shares of common stock that are actively traded on a major stock exchange.

The Explanation Of Periodicity In Accounting

 

What is periodicity in accounting?

 Accounting, periodicity means that accountants will assume that a company’s complex and ongoing activities can be divided up and reported in annual, quarterly and monthly financial statements. For example, some earth-moving equipment may require two years to manufacture but the activities will be divided up and reported in quarterly financial statements. A similar situation occurs at a company that develops complex digital systems.

Even a company that manufactures small consumer products will have ongoing activities and costs that overlap two years or more. Again, the accountants will assume that the revenues and costs can be assigned or allocated to the appropriate accounting periods. Hence, the accountants will report the company’s net income and cash flows for each accounting period (year, quarter, month, etc.) and the company’s financial position at the end of each accounting period.
Periodicity is also known as the time period assumption.

Principles Of Accounting

 

What is the full disclosure principle?

 For a business, the full disclosure principle requires a company to provide the necessary information so that people who are accustomed to reading financial information can make informed decisions concerning the company.
The required disclosures can be found in a number of places including the following:
- the company’s financial statements including any supplementary schedules and notes (or footnotes).
- Management’s Discussion and Analysis that is included in a publicly-traded corporation’s annual report to the U.S. Securities and Exchange Commission.
- Quarterly earnings reports, press releases and other communications.
The first note or footnote in a company’s financial statements will disclose the significant accounting policies such as how and when revenues are recognized, how property is depreciated, how inventory and income taxes are accounted for, and more.
Other disclosures in the notes to the financial statements include the effects of foreign currencies, contingent liabilities, leases, related-party transactions, stock options, and much more.
Judgement is used in deciding the amount of information that is disclosed. For example, in 1980 large U.S. corporations were required to report as supplementary information the effects of inflation and changing prices on its inventory and property (and cost of goods sold and depreciation expense). After several years, the disclosure became optional since the cost of providing the information exceeded the benefits.

What are the accounting principles, assumptions, and concepts?

The basic or fundamental principles in accounting are the cost principle, full disclosure principle, matching principle, revenue recognition principle, economic entity assumption, monetary unit assumption, time period assumption, going concern assumption, materiality, and conservatism. The last two are sometimes referred to as constraints. Rather than distinguishing between a principle or an assumption, I prefer to simply say that these ten items are the basic principles or the underlying guidelines of accounting. (My reason is that accounting principles also include the statements of financial accounting standards and the interpretations issued by the Financial Accounting Standards Board and its predecessors, as well as industry practices.)
There are also “qualities” of accounting information such as reliability, relevance, consistency, comparability, and cost/benefit. These are discussed in the Statement of Financial Accounting Concepts No. 2, which can be found on the Financial Accounting Standards Board’s website www.FASB.org/st.

What is principles of accounting?

Three meanings come to mind when you ask about principles of accounting…
1. Principles of Accounting was often the title of the introductory course in accounting. It was also common for the textbook used in the course to be entitled Principles of Accounting.
2. Principles of accounting can also refer to the basic or fundamental accounting principles: cost, matching, full disclosure, materiality, going concern, economic entity, and so on. In this context, principles of accounting refers to the broad underlying concepts which guide accountants when preparing financial statements.
3. Principles of accounting can also mean generally accepted accounting principles (GAAP). When used in this context, principles of accounting will include both the underlying basic accounting principles and the official accounting pronouncements issued by the Financial Accounting Standards Board (FASB) and its predecessor organizations. The official pronouncements are detailed rules or standards for specific topics.

Prepaid Expenses-Accounting

What are prepaid expenses?

Prepaid expenses are future expenses that have been paid in advance. You can think of prepaid expenses as costs that have been paid but have not yet been used up or have not yet expired. The amount of prepaid expenses that have not yet expired are reported on a company’s balance sheet as an asset. As the amount expires, the asset is reduced and an expense is recorded for the amount of the reduction. Hence, the balance sheet reports the unexpired costs and the income statement reports the expired costs. The amount reported on the income statement should be the amount that pertains to the time interval shown in the statement’s heading.

A common prepaid expense is the six-month premium for insurance on a company’s vehicles. Since the insurance company requires payment in advance, the amount paid is often recorded in the current asset account Prepaid Insurance. If the company issues monthly financial statements, its income statement will report Insurance Expense that is one-sixth of the amount paid. The balance in the account Prepaid Insurance will be reduced by the amount that was debited to Insurance Expense.

 

When do you adjust the amount of prepaid expenses?

The balance in the current asset account Prepaid Expenses should be adjusted prior to issuing a company’s financial statements. If the company issues financial statements for each calendar month, you will need to adjust the balance in Prepaid Expenses as of the end of each month. If your company issues only quarterly financial statements, you will need to adjust the balance at the end of each quarter.
The goal is to have the balance in Prepaid Expenses be equal to the amount of the unexpired costs as of the end of the accounting period (which is also the date appearing in the heading of the balance sheet).
Usually the adjusting entry for prepaid expenses will be a credit to Prepaid Expenses and a debit to the appropriate expense account(s). For instance, if Prepaid Expenses involve the prepayment of insurance premiums the adjusting entry will include a debit to Insurance Expenses.

What are the two methods for recording prepaid expenses?

The two methods for recording prepaid expenses have to do with the general ledger account that is initially debited at the time of the cash payment. The two methods or approaches are:
1. debit an asset account (such as Prepaid Insurance) which is the balance sheet method, or
2. debit an expense account (such as Insurance Expense) which is the income statement method.
The use of either method will almost always require an adjusting entry prior to issuing the company’s financial statements. However, the amount, the account that will be debited, and the account that will be credited in the adjusting entry will depend on the method used.
In short, either the balance sheet method or the income statement method for recording prepaid expenses may be used as long as the asset account balance is equal to the unexpired or unused cost as of the balance sheet date.

How should the cost of a yearly subscription for a newspaper be recorded?

In theory, the payment in advance for a one-year subscription should initially be recorded as a debit to Prepaid Expenses and a credit to Cash. During the subscription period, you would debit Subscription Expense and would credit Prepaid Expenses.
For example, if the annual subscription cost is $240 and it is paid in advance, you would initially debit Prepaid Expenses for $240 and credit Cash for $240. If your company issues monthly financial statements, then each month during the subscription period you would debit Subscription Expense for $20 and credit Prepaid Expenses for $20. This results in 1) the matching of $20 to expense on each of the monthly income statements, and 2) the balance sheet reporting the amount that is prepaid or not yet expired.
At a large company, the annual cost of $240 will usually be an immaterial amount. The materiality concept will allow you to violate the matching principle, and to avoid the monthly adjusting entry, by simply debiting Subscription Expense for the entire $240 at the beginning of the one-year subscription period.