FinFax Syste & Accrual-Cash-FinFax Basis of Acctg -0935-07 zzfwi

Accrual-Cash-FinFax Basis of Acctg -0935-07 zzfwi

                     TO:   All Interested Onliners                                                                                                FROM: Jim Bramer. Retired Auditor-CPA
                                                                                                                                                                       FILE:    0935-07/fwi

                      RE: The "FinFax" System & Accrued Expense Acctg Equivalent                          Originated in April 2007

    "Today's "Ax to Grind"

    It seems that issues regarding Accrual Basis and Cash Basis accounting methods/systems are continually before finance people at Ministries. Of course, this involves the preferred Accrual Basis of Accounting method of reporting incurred bills that have not yet been paid out of the Bank Account as compared to the Cash Basis method whereby you reflect only what has passed through the Bank Account, etc. The emphasis in this "Ax to Grind"   editorial is accruing aspects of EXPENSES and not the accrual features of any INCOME. Let me share about this from this "old codger's" perspective:

      A>       It is essential for the applicable Ministry leader to timely get, in a consistent format, meaningful financial facts (please note the "FinFax" System below), of "What" is the situation or "What" has happened Please also go HERE for the Mission Statement as to this Internet Friendly accounting system. You, of course, as the very best possible steward, need to be informed of all the applicable/known financial information that pertains to your part of the Ministry --- especially with regard to "General Fund - Actual to Budget" data. Please also Click Here for more information of this nature.

      B>      Basic to all of this is knowing "What" has actually been spent "Now" in all applicable facets of the Ministry. Please note that I have said "What" has been spent and not "How" you have spent it, etc. As we all know, this involves disbursing money out of the Bank "Now" using mostly checks or debit cards.   But, equally important, it also includes that which has been spent "Now" via the use of Charge Accounts at Vendors and/or by using Plastic or Credit Cards ---- or you have incurred an expense but it has not yet gone out of the Bank.

    C>      Or you obviously need to use the Accrual Basis of Accounting (or its "Equivalent" like the FinFax System as described below) in order to get everything before you and meet the fundamental objective of knowing all of "What" has been spent "Now" information. Or we do not rely on "How" we do our spending as we get the essential financial facts (FinFax)

      D>      In my judgment, as discussed at 0004, reporting via the Accrual Basis of Accounting is an essential part of day-to-day operational GAAP (Generally Accepted Accounting Principles) as it applies during the year and not just at the year end.   In my judgment, operational year GAAP matters should also embrace the peculiarities mentioned in 0041 -- or we need to include in the operational "Actual to Budget" reporting all of the usual known General Fund or FinFax,    This also includes such matters as Debt Retirement, (not Depreciation Expense) , the acquisition of Equipment and Furniture , and also include Board SetASides issues.

    E>       I am fully aware that it is a challenge for BLVRs   and Mom-Pop or SmallMins -to not only process paid bills (Cash Basis only) so they know who/what belongs to the money on deposit, but to also account for and make known unpaid bills throughout the year.

"FINFAX" SYSTEM - (01)

    Therefore, I set forth a   FinFax System that is Internet Friendly as well as provides the "Accrual Basis Equivalent" financial facts needed by Mom-Pop or SmallMins (Small Churches especially) or by BLVRs    This system can work even if you keep your books manually.
    By the way, as to Internet Friendly aspects, I am told that some 60% of US Household members now use mobile Lap top computers with high-speed fast Online connections. Another factor in all of this is that current users of the Internet are divided up in the following age groups: <01>   Almost three fourths of all people aged 18 to 49 <02>   Nearly two thirds of all people aged 50 to 64 <3>   Some one quarter of all people 65 and older.
      This is how the "FINFAX" Accounting System works for either the applicable Mom-Pop or SmallMins or for a BLVR in their disciplined pursuit of Righteous Personal Finance:

             1>     This FINFAX System has a   weekly "Accrual Basis Equivalent" accounting and reporting thrust.

   2>     You buy everything possible via a Credit Card or you make full use of the Plastic system --- but, of course, you do NOT have a "Debt Problem" since the Plastic balance is paid off weekly -- see below. Please note more information about this system in the MORE HELPFUL LINKS BELOW as you embrace the merits in using Plastic.

   3>     Your Bank and Plastic transactions either come to you automatically each day ( Go to QBOE and learn more about this) , or you manually go and electronically get to this data. Before the weekend (let's say Friday) the person responsible for this (perhaps functioning from their home) would finalize these transactions plus know the total amount due to the Credit Card Company, etc. If you do not have online access then you pay using the known Plastic or Credit Card slips. This person would then pay off the current Plastic balance "Now"-- or you do not wait and do this monthly but you go Online and pay off the balance weekly.   Of course, such transactions then show up that week for reporting purposes like any other disbursement via the Bank Account.

4>     After you paid as many bills as possible via the Online payment process (especially repetitive bills, etc.)

   5>    You be sure that you weekly hand-write checks and pay all of the other known operational bills.

6>     On the following Tuesday this person would post the weekly receipts (for instance, a Church would make it's weekly deposit as soon as possible after the Sunday's offering, etc.) to this FinFax accounting system and prepare, in essence the "Accrual Basis Equivalent" or Cash weekly report. At a Mom-Pop or SmallMin, this would be distributed to applicable Ministry personnel who would now have a complete "Now" report. Please note the Spending Control system and report samples found at 0002 per one of the HELPFUL LINKS BELOW The content of this Website should also be of value.

7>     Due to what we have done via this FinFax System there would be no known unpaid bills for this week, as this "Accrual Basis Equivalent" Cash report includes all known "Now" purchase information.

      COMMENT: While designed primarily for the BLVR or a Mom-Pop or SmallMin this method can also be incorporated into any size Ministry or Church. Let me know at Jim@bcidot.org if you have any comments or questions about this "FinFax" System.

HELPFUL LINKS BELOW. - (02)

0041-01 Fun (d) Accounting - not Fun
0004-01 Generally Accepted Accounting Principles - GAAP
1211-01 After the Fact (ATF) Accounting System
0201-15 Weekly Plastic Payment matters
0208-03 Debit Cards
4040-01 Righteous Use of Credit Cards, or Plastic
0002-99 BuxBox system which is an alternative to the usual General Fund Budget method
Please note this "Spending Control" website.

K E E P   L O O K I N G   U P !!

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UPTD: July 24, 2008

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