[jpomerenke]

Accounting is kind of a black and white subject because there are many ways of doing it. But i have some questions -

I just got done with my first real quarter is operations so i am in the middle of doing a quarterly report for myself and also for tax reasons obvioulsy.

Do you have to wait until all of the bills for that 3 month period come in or do you just go ahead and do the report with what is in as of the first of the month. For example -- i only have 2 out of the 3 months bills from my distributor because they usually dont send them until the second week into the month. So i have 3 months worth of sales and only 2 months of Cost of Goods technically - making my margins look way better then they actually are. I guess what i am wondering is - is this normal because i know all companies always have bills from there distributors out when they do there financials. But it just doesnt seem like a very accurate way of gauging how you are doing, etc.

Also how are refunds treated? Take them completely off the books? Dont treat them as a sale?

Thanks in advance

[mpnetwork]

At the end of each reporting period/quarter you need to make adjusting accounting entries to account for two factors:

1. Accruals for revenues and expenses that occur / are matched to dates prior to when you record them.

For example - sales, refunds, payrolls and bills incurred in Quarter 1 that you dont receive or pay until Quarter 2.

Say you receive a telephone bill in Quarter 2, but it was for charges incurred in Quarter 1, and you paid it by pre-authorized deposit in Quarter 1. You would make an adjusting entry to your Quarter 1 financial statements - Credit from your bank account and Debit from your Telephone Expense.

Say you receive a telephone bill in Quarter 2, but it was for charges incurred in Quarter 1, but you wont pay it until Quarter 2. You will make an adjusting Debit to Telephone Expense and then a Credit to Accrued Expenses (which is an account you create under Accounts Payable because you owe the money but havnt paid it).

2. Deferrals for revenues and expenses that occur / are matched to dates after when you record them.

Say you prepay your rent for an entire year and your original accounting entry was a Debit to Prepaid Rent (a short term asset) and a Credit to your bank account. Because this should benefit your company throughout the year, not just one quarter, you need to treat it accordingly. So at the end of the quarter you need to make an adjusting entry: Credit 1 Quarters worth of rent from Prepaid Rent and Debit 'Rent Expense'.

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Try this link for more information that may help you:
http://www.netmba.com/accounting/fin/process/adjusting/

[mpnetwork]

Refunds should be includes as a sub-account of Sales.

Sales ............................................... $100
Sales Returns & Allowances ............... $10
---------------------------------------------
Net Sales Revenue ...............................$90

So when you refund the customer, credit your bank and debit Sales Returns and Allowances. You also debit the value of the returned product to the associated inventory account and credit from the associated inventory expense.