Depreciation Schedule

Buildings, machinery, equipment, furniture, fixtures, computers, outdoor lighting, parking lots, cars, and trucks are examples of assets that will last for more than one year, but will not last indefinitely. During each accounting period (year, quarter, month, etc.) a portion of the cost of these assets is being used up. 


Depreciation is the lost in value of physical assets through its use. The yearly deposits into the depreciation fund are called depreciation charges. The depreciation fund is the portions of a given amount at the end of its useful life or the difference between the original cost of the asset and the sum in the depreciation fund is called the book value of the asset. 




The calculation and reporting of depreciation is based upon two accounting principles:

1. Cost principle. This principle requires that the Depreciation Expense reported on the income statement, and the asset amount that is reported on the balance sheet, should be based on the historical (original) cost of the asset. (The amounts should not be based on the cost to replace the asset, or on the current market value of the asset, etc.)
2. Matching principle. This principle requires that the asset's cost be allocated to Depreciation Expense over the life of the asset. In effect the cost of the asset is divided up with some of the cost being reported on each of the income statements issued during the life of the asset. By assigning a portion of the asset's cost to various income statements, the accountant is matching a portion of the asset's cost with each period in which the asset is used. Hopefully this also means that the asset's cost is being matched with the revenues earned by using the asset.

Here's an example of how to get an objects depreciation value and schedule:

Reference(s):

http://www.accountingcoach.com/online-accounting-course/11Xpg01.html

Bank Reconciliation

Bank Reconciliation is the process of bringing the bank's monthly report for each depositor showing deposits made, check written, cancelled checks, and service charges. 

A check is a document that orders a payment of money from a bank account. Checkbook contains checks and check stubs. The checks are filled out by the depositors made, and of charges made by the bank.

Example of a Check

Bank Reconciliation happens when you compare your records to the bank’s records. It's important to do a bank reconciliation at least every month to make sure you know what’s happening with your accounts. 

There might be differences in the balances when you do a reconciliation statement. It may be due to: 

1. Outstanding checks. These are checks issued by the depositor but have not yet been presented to the bank for payment.

  2. Deposits in transit. These are deposits made but late to be included in the monthly bank statement.

  3. Service charges.

  4. Errors in the check stub entries.

  5. Cancelled checks. These are checks that have been paid by the bank.

Without bank reconciliation, you may not have a clear idea of how much cash is available in your account. You might bounce checks and incur overdraft charges. You also expose yourself to risk. People may be stealing from your account. If you never look through each transaction, you’ll never know about it. 

You can do a bank reconciliation by following this process: 

• The first step is to adjust the balance on the bank statement to the true, adjusted, or corrected balance. 

Step 1.	Balance per Bank Statement on Aug. 31, 2011
	Adjustments:
	Add: Deposits in transit
	Deduct: Outstanding checks
	Add or Deduct: Bank errors
	Adjusted/Corrected Balance per Bank

• The second step of the bank reconciliation is to adjust the balance in the company's Cash account so that it is the true, adjusted, or corrected balance. 

Step 2.	Balance per Books on Aug. 31, 2011
	Adjustments:
	Deduct: Bank service charges
	Deduct: NSF checks & fees
	Deduct: Check printing charges
	Add: Interest earned
	Add: Notes Receivable collected by bank
	Add or Deduct: Errors in company's Cash account
	Adjusted/Corrected Balance per Books

You can also use your computer to do the work for you by using tools like the Excel Bank Reconciliation Template. 

Step 1.

 Balance per Bank Statement on Aug. 31, 2011

 Adjustments:

     Add: Deposits in transit                     

     Deduct: Outstanding checks

     Add or Deduct: Bank errors

 Adjusted/Corrected Balance per Bank

Step 2.

 Balance per Books on Aug. 31, 2011

 Adjustments:

     Deduct: Bank service charges

     Deduct: NSF checks & fees

     Deduct: Check printing charges

     Add: Interest earned

     Add: Notes Receivable collected by bank

     Add or Deduct: Errors in company's Cash account

 Adjusted/Corrected Balance per Books

References: 

http://banking.about.com/od/businessbanking/a/bankreconciliat.htm

http://www.accountingcoach.com/online-accounting-course/13Xpg01.html