Bookkeeping Questions Answered
Answers To Basic Accounting Questions

Do ITCs need to be zeroed at the end of the year? 
When I submitted my GST/HST return, the government re-assessed it and ended up giving me $1.22 in Refund Interest. The way I accounted for it in my …

Handling Exchange Rate Fluctuations 
I hope you can help me with the following (simplified) example of a problem that I'm facing. I'm self-employed, running a Canadian corporation dealing …

GST Administrative Adjustment 
When you file sales tax with a balance of less than $2.00 the CRA states that a sales tax balance will not be charged (or refunded). On my Notice of Assessment …

How to correct a bank teller's error? 
Hi: I have a software corporation with finances separate from my personal finances. I have separate business and personal accounts at the same bank …

Year-End Question 
If my year end is Sept 30th, then my question is this -- Does Sept 30th 2016 represent my YEAR-END for 2015??? I am always so confused by this - as …

Paying Nanny Annually 
I am paying my nanny annually, she is a student who works part time, and the contract was that, I would pay her yearly on Dec 30th, and that this way she …

Estimated time for data transfer 
I know that this will be an opinion based question but I am looking for any help at this point. How long would it take to manually transfer bookkeeping …

Pay in Lieu of Benefits 
My employer wants to pay another employee a $1.00 per hour in lieu of benefits. How do I process that in payroll? Are the tax and deductions, CPP and …

Organization/Filing of W-9's 
What is the proper way to "file" W-9's? If it's an individual should it be by last or first name. If there is a business name that is not the same …

Coffee and Water For Staff 
What would be the correct way to account for coffees bought for employees on a fairly regular basis? (small corporation, construction, coffees consumed …

Woodworking Business COGS 
I was top of the class in accounting back in high school, but that was 35 years ago. I'm starting a woodworking business now and after many hours of book …

BC residential rental property with 50/50 ownership 
Two friends own a rental property. The basis of their agreement is to split all expenses 50-50. During the year we each cover various expenses depending …

Employee Credit Card Reconciling 
My client wants an individual reconciliation report for each employee. If the total payment is being applied to the "parent account", how am I go get …

Reserve Fund  
My client is a private company. They put "aside" a reserve fund for future major capital investments (5% of total income). Is that a balance sheet or a …

Incorporating  
Hello, and thank you for offering this opportunity to ask and read through various bookkeeping and accounting questions. We're a family run operation …

Software for Corporate and Personal 
I am looking for an accounting & bookkeeping solution to manage both my personal and corporate books. To my surprise it seems harder than I thought to …

Calculation of Payroll for Ontario 
I know that I can go to CRA website and calculate payroll deduction online. But I would like to understand how it works. Assume payroll $2000.00 per month …

No bank account - Related entity pays 
Hi I have a situation where one entitiy has no bank account, however another company (owned by same person), pays the first entity's bills. There …

Contract for Incorporated Business 
Hello, I have incorporated IT business. I know that in order not to be incorporated employee I need to have more than one contract. What if I have only …

WSIB Employer Advances 
The company has been reimbursed by WSIB for wages we paid an injured worker. Where should I code this reimbursement on the credit side. It can't be wages, …

How to Enter Incorrectly Charged GST 
Hello, I have run into a few cases where small shops or retailers have incorrectly charged GST, and I didn't notice until it was too late. These purchases …

HST for Music, Photos, Subcontractors 
Hello, I am a freelance producer and have a project where the full budget comes through my company. The subcontractors were paid in full including …

Invoicing as a subcontractor 
Hi, The business I work for is a subcontractor to a larger business. I am trying to work out how to best enter this information to reflect our earnings. …

Rental Related Expenses on T776 or T2125? 
I have a rental property in the US and Canada. I am not incorporated. I drive around to look at possible purchases, where do I expense those trips? …

Purchase of Land  
I am not sure how to record purchase of land: here is my real scenario: 1. It is an "agreement of sale" for corporation. Director bought the land but …

Creating Books Without Financial History 
Hi there, What do I need to start books for a company that has been up and running for 3 years with no previous (real) financials? I've been paying …

Un-deposited Charges Sales Not Posted 
My client's year end is Apr 30th. She never recorded her charged sales correctly. She booked the revenue and matched it to what was deposited in the …

Adjusting Journal Entries With Two Accounts Receivables 
I am trying to record the year-end adjusting journal entries given to me by the accountant, using QuickBooks, but I am having a problem with the multiple …

Unrealized Investment Gains 
A redemption of mutual funds has me confused about Journal entries. Prior to redemption I had: Mutual Fund Investments 80,888 DR Mutual …

Costly Repair 
I have a client in the restaurant business. Recently their large commercial cooler was not keeping its temperature. They had someone come out and ended …

HST Payment and Report Difference 
The last quarter that we submitted HST it appears the amount paid was incorrect. My boss paid his last quarter using the HST Return Report that I printed …

2013 Hiring Credit 
After reading all your posts regarding the hiring credit I am still uncertain how to make my books correct. I would like to share my specific situation …

HST Credits 
Hi Lake, It's that time of year again. Wondering if you could help me with a problem. In 2013 I overpaid my HST return by $52.29. CRA did not send …

Payroll and Independent Contractors 
Can I write a cheque to someone that is not considered an employee but also does not have business or is not a contractor. He will take care of his own …

Recording Credit Card Transactions 
Can anyone explain to me how a credit card transaction should work within your accounting system? The card currently has a five figure balance. What …

Interprovincial Sales Tax Error 
We are a small business with offices located only in Ontario however we provide maintenance services for customers all over Ontario and Quebec. Since we …

Credit Card Journal Entry 
I have just begun to accept credit card payments on my A/R. I am charging an extra percentage when the credit card payment is processed. I not sure how …

Third Party Pays Business's Consulting Fees 
BACKGROUND An agricultural business hires a consultant to analyze and make recommendations for improved pasture land. The consultant bills the agricultural …

Testing Debit Machine 
If my client's debit machine acts up he will test the machine by putting through a transaction for a $0.01 from his chequing account. I am not sure …

Market Research 
How do you record market research expense? Check out this article on expensing market research .

Promotional Items 
I have a new client who sometimes gives away his inventory items as promotional items. I just wanted to make sure that this is being handled correctly …

Double-entry accounting for separately managed investment accounts 
We have several separately managed investment accounts, some of which are RRSPs and some are not. The firm that manages those accounts provides monthly …

A Bad Cheque Signing Habit 
I work for a company that requires dual signatures on cheques. (I am not one of the signers.) One signer is on, site the other is not. Past practice has …

Classifying the Bookkeeper Position 
I asked my employer for clarification as to where my position as the company bookkeeper lies. Her response was that my job lies in the "grey area", could …

How to invoice a U.S. company 
My partner has a graphics design business and does work for a U.S. company (who recently acquired an Ontario business). How should his invoices be done …

GST/HST when invoicing a client for kilometers 
Hello I invoice my client for kilometers. They have advised me to not charge HST on the kilometer part of my invoice. Should I be charging HST? …

Performing Services Off-site and On-site 
I am an off-site home based business and currently do all my client's books from my home office. I recently acquired a new client that has requested …

Entering Data Off Of Bank Statements 
I have an interesting question. Do you think the CRA will accept bank statements instead of receipts? In other words, if I pay all of the gas through …

Bankruptcy Journal Entry 
My sole proprietor boss has filed for personal and business bankruptcy. He is still going to operate the business but I need to make a general journal …

Obselete Inventory 
We have some obselete inventory that we would like to write off. Could you please tell me what entry I would make to do this? I discussed obsolete …

Business Manager 
I want to know how I would do a journal entry for the owner of a self proprietor business that has withdrawn funds from his personal account and deposited …

Grant Income For Capital Purchases 
We have received a grant for a capital purchase. What would be the best account to credit the income to? If I enter it as "Other Income" it distorts my …

Highway Tractor Owner Operator 
We have a lease to own agreement with our carrier for whom we haul freight on a highway tractor. According to CRA we claim the lease payment as an operating …

How to record AgriInvest contributions? 
I was just wondering how to record the matching government contributions portion of the AgriInvest account. The Producer deposits are easy enough as …

Accounting Estimates 
Is there any place on your site that talks about how to do estimates and how to tell if something is reasonable or not? - I tried to do site search but …

Start-Up Information 
I am starting a home-based bookkeeping service. Can I use a mail box service for the bookkeeping service? Also, is there any permits or licenses required …

Payroll Tax Deposit DE 88 
Paying State of California Employment Development Department (EDD) for Payroll Tax Deposit (DE 88), does it go under Payroll Liabilities or Gross Wages? …

Privacy Regulations On Record Retention 
Can you clarify what you meant when you wrote - Re: record retention: "Pay attention to these record retention requirements and remember to factor in …

How to Record Cost Recoveries 
I have a consulting client who prepays for training workshops for his clients. He is charged by the training institute then he turns around and charges …

Claiming ITC 
Collecting HST paid prior to getting business number? Hello, A business I am working for just got its business number in July, and has been paying …

Trial Balance Reclass Entries 
If a chartered accountant firm has returned the year end trial balance & it shows entries in the Reclass column, what does this mean? Since the bookkeeper …

Employee Automobile Allowance 
I run a small cleaning service and I need a formula to calculate gas, wear and tear on staff vehicles. I want to be fair, but I also want to keep it …

Does Downloading Replace Data Entry 
People have said that I am wasting all my time entering data into Quickbooks and that I should just download my statements from the bank and that would …

CICA I and CICA V 
Differences between CICA I and CICA V of the CICA Handbook? Hi Liza, As I understand it, Part I is the new IFRS GAAP standards and Part V is …

Undelivered Invoices of Creditors 
Hi, How to treat undelivered invoices of suppliers in the accounts payable? Assume that we close the accounts at 31/12/2010 for the year. Supplier …

Customer gifts as expenses 
What is the best account to post customer gifts to? Should it be considered marketing and promotion or a type of miscellaneous expense? Hi …

Accumulated Surplus 
Non profit organization. Moving money from an investment to bank acct using $'s in a non restricted "building fund". Have Dr Bank, Cr investment acct. …

Gift Voucher Sales 
Business is a Hair Salon. Customer buys a gift voucher ... total Gift Voucher sales for the week is £100. I am recording - Credit in Gift Voucher …

Actuals to Budget Analysis 
I am hoping someone can help me please. I have been asked to do a comparison spreadsheet between actual revenue and net profit figures against budgeted …

Refundable Deposits 
I purchase building permit for $100.00. $20.00 of it is a deposit that I will recieve it back in a couple of months. How do I enter the orginal purchase …

Cost of Good Sold with Taxes? 
I sell Avon and am doing 2009 taxes (late). I put my net sales in without taxes. So, now for the purchases made during the year; do I include GST/PST …

Recording Bookkeeping Fees 
What is the correct account to record fees paid to a bookkeeper? Professional fees or miscellaneous expenses? Hello, Generally, the expense …

Barter Transactions and the IRS/CRA 
Received vehicle in payment for work done I need to know how to record the following transaction: We are a painting business and have painted …

Software Purchases 
Shoud I expense the purchase of software purchases or capitalize them eg QuickBooks or Simply Accounting? Hi Murray, Software purchases other …

Manual Bookkeeping
Synoptic Journal 
My husband and I are starting a very small home business. Is it too old school to keep manual records? Hi Rebecca, Yes you can keep manual …

Bookkeeping for an Electrician 
I kept the books for a furnace cleaning company that I owned for 8 years but I am no longer in that now. I am helping my son-in-law to set up books for …

Net Income / Tax Calculation 
Hi Love your website - I've just started out my own business as a sole proprietor and trying to get my books in order and so many helpful tips!! …

Office Manager 
Hi, My husband owns a small painting company. I do all his paper work and talk to a lot of customers. Sometimes I have to fill out papers that ask …

Businessman 
When are Corporate Income Taxes and GST Statute Barred. ie how many years from what date? Hi Gary, D. Laurence Armstrong, of Armstrong Wellman, …

Tax on New Land Purchase 
We recently purchased some land and are having it subdivided and then wish to sell each piece separately. My question is...will we have to pay capital …

Studying Bookkeeping 
Failure to record the used portion of prepaid rent during the month has the following effect on the financial statements prepared at month's end: a. Overstate …

IFRS and ASPE 
This posting includes discussion of Canada's new Accounting Standards for Private Enterprise ... and some differences between U.S. GAAP and IFRS. References …

Multiple Business Activities 
Hello, I have a registered company that offers Technical support. If I offer other services beside what my business definition is ... can I show …

Report a Materiality 
Where is a materiality reported? Hi Jill, I'm going to give you a link on my site where I talk about the concept of materiality. The Materiality …

RSP Deduction  
Hello, I am thinking about buying an RSP this year. How much should I buy to get back a refund on my income tax? I usually do not have to pay …

From Shoebox To Quickbooks® 
Any tips on where to start ... I have a year's worth of receipts, cheques, and statements. Where do you suggest I start? Hi! I'm going to give …