Did you know that depending upon what industry your company operates in that you must pay attention to specific accounting data that affects your recordkeeping the most? Some industries defined below show areas of emphasis for your type of industry:
Manufacturing: Areas of emphasis: inventory, accounts payable, liabilities
When you prepay for an item that has not yet been made, you must account for it accurately by vendor. A good way to do this is to create an account in your liabilities section of your chart of accounts titled 'inventory purchases receiving'. When cash is credited, the inventory purchases receiving account will then be debited for the item being prepaid for. This creates what is called a holding account for those prepaid items. When the items are made, the inventory purchases receiving account will clear for that amount, debiting inventory and crediting your accounts payable account. By keeping this inventory purchases receiving account reconciled, you will be sure of what you owe to vendors, what you have coming as a preorder, and what you have received, a huge part of what makes up the manufacturing industry financial data.
Services: Areas of emphasis sales, expenses
For services industries, the types of sales must be broken down accurately recorded properly on invoices. When setting up the sales, they must be set up to accurately reflect all types of sales your business has. Otherwise, the sales totals will be inaccurate. In addition, expenses are also a large piece of importance, since many different types of expenses are also accounted for in this type of business.
Distribution: Areas of emphasis: inventory, sales
For this type of industry, your inventory is crucial to the success of the business as are sales. Inventory must be counted accurately and customer orders must reflect the correct item the customer ordered. If not, inventory will be off and the sale will reflect the wrong item ordered.
Non-profit: Areas of emphasis: sales
Sales are a large part of a non-profit industry, since non-profits operate off of charitable donations/giving. When a person makes a charitable contribution, a sales receipt must be recorded for that sale amount, thus giving the company and the customer a form of receipt that will be required by the IRS at year end for charitable contribution documentation.
Copyright Jeanine Pfeiffer