3rd stage of accounting

The Third Stage of Accounting

 Go to The Virtual Accountant to see a diagram of how this works.

Stage I – Before Computers

Back in the dark ages (before computers) accounting/bookkeeping was a totally manual, very tedious and an unproductive exercise.

1. transactions occur; expenses result in vendor invoices; accounts payable are recorded; sales occur; sales invoices and accounts receivable are prepared; employees perform duties; payrolls are prepared; accounts receivables are collected; vendors and employees are paid
2. all of the above transactions were hand logged into journals: cash receipts journal, cash disbursements journal, sales journal, payroll journal, etc; the journals were summarized by the general ledger accountant; the summaries are posted to the general ledger; a general journal is prepared to record depreciation, accruals and other non cash activities
3. the general ledger must be balanced; the cash accounts must be reconciled; vendor statements are reconciled; customer statements are reconciled
4. a trial balance is prepared from the general ledger
5. the financial statements are “written up” from the trial balance, drafted, typed, proofed and released

Stage II – Computers

1. accounting software running on small to large computers for companies of all sizes is used to automate many of the previously all-manual functions
2. vendor invoices are entered into the accounts payable module by an AP clerk
3. invoices are either matched with open purchase orders or are routed to appropriate personnel for approval
4. if the company manufactures or distributes inventory, an individual records the inventory receipt
5. sales occur and accounting personnel create sales invoices which are mailed; the computer updates the sales accounts and accounts receivable
6. cash receipts are collected; a deposit is manually prepared and entered into the computer; the computer adds the deposit to the cash account and the accounts receivable account of the customer being credited
7. accounts payable are reviewed for payment; selected open invoices are entered in the computer; check stock is loaded and checks are printed; the computer reduces the general ledger cash account and the vendors’ open accounts payable
8. pay information is received periodically by the payroll clerk; payrolls are prepared; employees are paid; if the payroll system is integrated in the accounting software, the appropriate accounting takes place; if the payroll is done by a service provider, the recap of each payroll is manually entered into the computer
9. all of the above transactional activity is automatically integrated into your accounting software (QuickBooks, Peachtree, or others)
10. an accountant performs the bank reconciliation, records depreciation, makes accruals and other “general journal” entries and your books and financial statements are finalized late in the month

Stage III - The Virtual Accountant

Our Virtual Accountant tool is a combination of technology and our CPA services that can totally eliminate your need for a bookkeeper or accountant in your organization. Advantages are many:

1. No more HR issues (compensation, benefits, performance, absenteeism, possible fraud, etc., etc.)
2. Lower costs. Our services generally cost about 50% of what a full time, full charge bookkeeper costs
3. GREATLY reduced hassles in all of the functions relating to handling of cash receipts and disbursements, billing, accounts payable, payroll, bank reconciliations, general ledger maintenance, and TIMELY and accurate financial reporting
4. Gone are the days of daily transactional duties performed by a bookkeeper, possibly monthly oversight by a CPA, and financial reports delivered three weeks (at best) after month end
5. Basically your entire accounting is handled in the “cloud” on a trusted network where you submit your transactional paperwork daily, and through the use of processing and bookkeeping tools, our team handles everything for you while under your complete control. And since your entire accounting is on the trusted web network, you have complete access to all your accounting 24/7/365
6. Marshall, Jones & Co. performs the bank reconciliation, records depreciation, makes accruals and other “general journal” entries and your books and financial statements are ready to go, generally no later than the 3^rd business day of the month

Go to The Virtual Accountant to see a diagram of how this works.