Do ghosts exist? Yes, no, or maybe, but ghost assets do exist. They are in your records, but you tend to ignore their presence and end up in trouble.  

Any asset that is lost, stolen, or unusable but is still listed as active on your fixed asset register is referred to as a “ghost asset.” For example, a broken printer, unused computers, stolen goods, anything of this sort can be listed under the ghost asset category.  

How do Ghost assets harm the business?  

Ghost assets affect the business and workflow. As explained above, they are the assets that are physically unavailable but exist in the records. Such assets may cause harm for businesses. Imagine how much time an employee might lose trying to locate the asset which is recorded in the files. In turn, it would affect productivity and waste time. Taxes are also being paid for such assets and money is being wasted for no reason.  

How to identify Ghost assets? 

Business records can be used to locate and get rid of ghost assets. No matter how big or small the business is, the authorities are required to keep records from the beginning. Avoiding ghost assets can be made easier by updating every single and minute change.  

Businesses frequently fail to recognize the need to eliminate unused or stolen goods from the records until it is too late. The fundamental procedures for locating ghost assets are linked to record maintenance. Regularly update, manage, and monitor your business records.

Benefits of eliminating Ghost assets.    

• Reduces tax amount 
• Reduces Insurance  
• Increases productivity and Saves time 
• Accurate financial reports 
• Saves money 
• Improved and effective financial forecasting 

Unattended ghost assets can cause stress and uncertainty. Track your records and eliminate such assets from the records, soon.  

Cash flow and Trial balance are two different yet connected terms that are familiar to everyone involved in the business. Discussions have been going around for a very long time to decide which is better or which one to trust. Take another look at both before moving on to conclusions based on the knowledge you already have. 

Cash Flow 

The simplest definition of cash flow is the movement of money into and out of business. A cash flow statement is a financial report that notes the sources of income and expense details of the company in each period. The income is categorized as Cash inflow while the expenses are generally called outflows. It is as important as any other financial statement. 

• Sales revenue 
• Interests from investments 
• Other investments 
• Royalties 
• Licensing agreements and more.  

A cash flow statement provides a detailed image of the company’s performance for the period. It also assists in; 

• Study of liquidity and solvency 
• Position of cash 
• Allocation of cash 
• Short and long-term planning 
• Efficient cash management 
• Comparative study 
• Analyzing cash flows from different activities separately.  

The cashflow report also consists of operating, Financing, and investing activities. Inflow and outflow are the subparts of operating activities.

Trial Balance 

Trial balance is a report that shows the balances of each general ledger account in the company. Also, it is to be noted that a trial balance is not a proper financial statement, but it aids as the base in preparing the same. The accounts shown on a trial balance include: 

• Assets 
• Liabilities 
• Equity 
• Revenues 
• Expenses 
• Gains
• Losses 

A trial balance is different from a general ledger. While the general ledger reflects all the transactions by the account, the trial balance shows only the account totals. Separate transactions are not mentioned in a trial balance. It is prepared only for internal use only.  

Uses of Trial Balance 

• Trial balance statement assists in identifying the balance of debit and credit entries in the general ledger.  
• Any possible errors can be identified and rectified.  
• Additionally, it also helps in making the necessary adjusting entries to the general ledger.  
• Trial balance is used as a basis for preparing financial statements.  

Cash Flow or Trial Balance? 

The Cash Flow statement is a record of the inflow and outflow of cash in the company. It aids in understanding and analyzing financial performance, which in turn assists in financial planning and influences making the right decisions. The trial balance is an overall record, and it is not even a proper financial statement.  

In conclusion, cash flow statements help companies better in finance-related matters.  

“The biggest mistake a small business can make is to think like a small business.” 

Are you an SME owner, a business partner, or someone with a business dream? Learn about how to build a business from scratch using a few essential things.  

No matter the size of the company, whether small, medium-sized, or large, the basics must always be managed in the same manner. It is the duty of business owners to take caution in all areas of their enterprises in order to ensure their expansion.  

Big businesses employ more people and separate teams for each purpose. This may not be the condition of SMEs. The majority of SMEs have a small workforce, and one employee may be looking into several items simultaneously.  

Small and medium-sized businesses, or SMEs, are expanding everywhere. Although it is simple to start something, managing it and improving it is more challenging. From the beginning, there are a million things to take care of. 

Top 5 SME essentials 

Laptop/ Desktop 

A laptop/ desktop is as necessary as you need a pen or pencil to write. Even while smartphones can now perform many computer-related tasks, owning a PC is still recommended. The files can be accessed by everyone concerned without compromising your privacy. When compared to a mobile phone, it also has more storage.  

Business Plan 

Every stage of growth requires a plan. You must have answers to numerous Whats, Hows, Whys, and other questions. First, decide on your business concept and develop a workable plan that will enable you to work without stress.   

Market Analysis 

Finding evidence for a market segment that can be exploited is, to put it simply, the goal of market analysis. For instance, if you want to start a furniture company, you need to find out what the market needs and what is missing from the market. It helps you gain more knowledge about your competitors and potential clients.  

A close-knit team

The power of teamwork is not something that needs to be explained here because you know it already. Make sure you handpick your team members, whether there are two of you or 200. A diligent, reliable team can accomplish great things.  

Accounting Software 

Accounting Software? Do you think that it is a luxury for an SME?  

Having an expert accountant on board might stop you from using accounting software, which is common. Accounting software for your company is strongly advised, even if you are an accountant yourself. Compared to people, technology tends to make fewer mistakes.

You may come across various options while looking for the ideal software. It is up to you to choose the best one for your company’s requirements.  

Accounting software is used for more than just bookkeeping; it also helps with tax computations, inventory management, payroll management, record keeping, and other tasks. You are liberating yourself from your office by employing software for all these functions.

Keep your business close to you even when you go out of the station.  

Why only these 5? 

There are countless additional elements and activities that are crucial to every organization. These are also the five most fundamental requirements that must be set up even before a business idea manifests itself. You can move on with confidence in finding a location, inventory, etc. after these are in place.  

Success does not happen overnight; it is a result of your hard and smart work. Never compromise on the quality of your work according to the size of your business.  

You might have heard the term ‘Bank reconciliation’ multiple times but did not bother to go in-depth to find out what it is. If you are someone who is in the business game or who is interested in such details, you might know this. Let us see what it is and how it helps in your business in the simplest way. 

Bank Reconciliation: Definition 

Bank reconciliation is the process of identifying, comparing, and matching your financial records and bank statements. Your company’s financial records must match its bank statements. Any discrepancies in it may lead to errors and complications.  

How does Bank Reconciliation help in business? 

Reduces the chances of errors 

Reconciliation helps you to detect common accounting errors. There are chances for you to mention unpaid invoices as paid and so on. Such errors in calculation, addition, and subtraction can be detected and avoided using reconciliation statements.  

Supports you in making financial decisions 

Referring to your bank statements or account books separately cannot help you to summarize your transactions and balance. Even if you forget to enter any transactions to your account book, bank reconciliation statements might help you figure out the correct balance. Thus it supports making the right financial decisions. 

Prevents theft from your account 

As you use multiple methods of payment, you are prone to bank-related thefts. There are people who steal money from your accounts without any cards or cheques from you. But, any such unauthorized transactions and issues can be easily identified using reconciliation statements.  

Is it necessary to reconcile your records? 

Yes, reconciling your records is as important as anything else related to it. Imagine you have a profit of AED 50,000 in a month, and it is shown in the financial records, but your bank statement says that you have AED 47,000 only. There is a difference of AED 3000. While doing business you cannot be ignorant about even a single penny leaving or coming into your account. 

Bank reconciliation statements enable you to summarize your banking and financial records. They verify that the payments and cash collections have been processed or not.

As you are on this page, we assume that you either live in the United Arab Emirates or are curious about the subject. In either case, you are in the right place. We cannot avoid paying taxes in our daily lives. We all pay taxes every day in one way or another. So, it’s important to keep up with the latest developments.  In UAE, most of the goods and services are subject to Value Added Tax. After each tax period, every taxable person in the UAE is supposed to file a VAT return with the Federal Tax Authority (FTA). 

• The new federal corporate tax on business earnings of 9% on profit would take effect only on June 1, 2023. 

What is VAT?  

VAT stands for Value Added Tax. At each stage of an item’s manufacturing, distribution, and sale, it is levied on the gross margin.   

Read: How VAT work in UAE? An overview. https://www.simpleaccounts.io/2020/09/08/vat-in-uae/ 

Read: How to file your taxes easily? https://www.simpleaccounts.io/2022/03/03/file-taxes-easily/  

How to Avoid VAT Penalties in UAE?

Record your transactions 

Keep records of every business transaction including income, cost, expenses, and more. Having proper records of transactions helps while filing VAT and other taxes. The government may ask for the records and the failure to submit them on said time attracts a penalty. Recording the transactions also helps in being organized.  

Learn about taxes 

Know everything about VAT and other taxes, if any. You are supposed to pay the tax to the government which you collect from your customers. The government also reimburses the tax you paid to your suppliers at the same time. Everyone should be aware of the taxes in the nation, regardless of their line of employment. Being updated about all these assists you in making the right decisions without being fined.  

Register for VAT 

Register your business for VAT if your annual turnover is more than AED 375,000. If your annual turnover is more than AED 187,500, it is optional. The criteria for VAT registration vary according to the turnover of the businesses. As you are running a business, you must be knowing the criteria. So that any future complications can be avoided. 

Keep note of the tax periods 

A tax Period is a specific period for which the payable tax shall be calculated and paid. While the tax period is monthly for a few, it is quarterly for others. File VAT returns monthly for businesses with an annual turnover of AED150 million or more and quarterly for businesses with an annual turnover below AED150 million. 

Send Tax Invoices without fail  

A taxpayer must send out a tax invoice within 14 of the date of supply [Article 67 of the UAE VAT Law]. Never miss mentioning the name, date, company details, and other information on the receipt. 

Learn how reverse charges work 

Businesses who buy items from vendors based outside of the UAE are typically subject to the Reverse Charge Mechanism, a special tax treatment of the UAE VAT.  When products and services are imported from outside the GCC, these fees are applied. So the business houses must be knowing about the mechanism to record in the transactions.  

Update about Zero-rated and VAT-exempted supplies 

There are other categories such as zero-rated supplies and VAT-exempted supplies, learn about both and make sure that you file taxes accordingly. Zero-rated supplies in UAE VAT refers to the taxable supply on which VAT is charged at zero- rate. 

Tax Penalties 

20 days are given to pay the underpaid taxes without penalties. 

Following the 20-day grace period, a 2% penalty will be assessed, followed by a 4% monthly penalty that must be paid at regular intervals beginning one month after the due date. The cap on the penalties remains at 300%.  Therefore a business must maintain proper records, failure in submitting the records when asked may attract a penalty of AED 10,000 for the first time and 20,000 on repetition.  

Even the smallest mistake in records can attract heavy penalties. The above mentioned are a few among them. 

It is the responsibility of the business houses to keep track of the records and developments regarding the taxes. There are fixed fines and penalties for every mistake that happens while filing taxes. If you are looking for ways to avoid such penalties, the only way to do so is to be vigilant about taxes. 

A Payroll Cycle is made up of a series of actions that are done in a specific order every month. Payroll isn’t just about the salary; it’s about a lot more. Salary, wages, bonuses, net compensation, deductions, and more. Every business, big and small, must have a properly aligned payroll management system in order to pay their employees quickly and precisely. 

Read more about the steps of payroll processing and its benefits https://www.simpleaccounts.io/2021/11/26/what-is-payroll-management-process/  

Payroll operations can be managed in a variety of ways. It consists of both offline and online methods. The market is seeing an increase in the number of online software that aids in effective payroll management. Because there are so many options, it’s vital to choose the best and the apt one. Not every method will be a good fit for your company. Before selecting one, make a list of your requirements.  

Learn and select 

It’s natural to be intimidated by software advertisements and other marketing approaches. So, before choosing one out of the bunch, take the time to study about your company and how the application can benefit you. 

Learn how to use payroll processing software. 

The majority of applications follow a set of rules. It is your responsibility to learn more about how online systems work. Also, do not choose any one app right away; instead, look for a few and compare their features.  

Understand the features of the application in detail 

The payroll processing software you select must be precise and perform accurate calculations. It should determine the pay to be paid after taking into account factors such as bonuses, leaves, and other benefits.  

Select software that generates pay slips automatically as well. If you choose the proper one, the payroll procedure will be completed in only a few clicks. 

Choose software with Customizable templates 

In a business, not all employees are compensated equally. The pay scale varies depending on factors such as experience, rank, and so on. In your payroll application, you must be able to keep all of your employees’ information. So that you don’t have to waste time filtering or searching for individual details. 

Subscribe for a trial period 

The majority of software applications offer a free trial period. Or pay for a month before committing to an annual subscription. Use it and see if it’s a good fit for your company. This way, you can avoid wasting money and time on something that isn’t right for you.  

There are many more factors to be addressed before selecting the system, but these are the most basic ones. You can now get your payroll system for free with customizable features. 

If you are a business owner, you might be knowing what a quotation is.  Even if you are not, you might have heard the term quotation multiple times in your life. Imagine that you are a seller dealing with fabrics.  

A prospect (someone who is likely to become a future customer) may have learned about the fabrics you are selling. The person approaches you to learn more about the items and the rates for which you are planning to sell. He or she might also approach other sellers. The prospect’s final decision is based on the offer you make. As a result, coming up with a unique and compelling quotation is important. 

What is a quotation?  

A quotation is a document issued by a seller in response to the needs of a customer. It’s a crucial document for effectively closing a deal. 

Elements of a Quotation 

• Your Company details 
• Customer’s Company details 
• Quotation Number 
• Quotation Date 
• Expiration Date 
• Description of your product in detail 
• Prices, discounts 
• Terms and Conditions 

Tips to prepare compelling quotes 

Be Professional 

Always write the quotation on the letterhead of your company. Avoid making grammatical or punctuation errors. Make sure your quotation is well-structured and does not leave the consumer confused. 

Determine your capability  

It’s critical to be certain about the stock you have and all of the details surrounding it. Sending a quote with ambiguous and unclear facts is not a good idea.  

Address your customer’s needs 

When it comes to customer satisfaction, the golden rule is to never assume. Before drafting a proposal, communicate with your consumer and be clear about their wants and needs. It assists in addressing their actual need through the quotation. Also, don’t waste your time or the time of your customer by quoting if you can’t deliver on time. 

Be unique and add value 

The prospect might contact other sellers for the same product. The only method to impress the customer is with your quotation. As a result, in order to stand out from the crowd, the quotation must be valuable and unique. 

Follow up 

Do not rush the process of following up. Follow up or remind the customer before the quotation expires, as the quotation contains the expiration date.  

Your customer needs a personalized and detailed quotation to close a deal with you. And, you need a compelling quotation to convert your prospects to potential customers.  

Accounting is one of the most well-liked professions. The number of students choosing commerce as a major in college and accounting-related employment is on the rise. Despite the fact that various accounting applications and software have been introduced to the market, none of them has the potential to completely replace human labour in accounting. Companies, both big and small, are looking for the finest accountants. 

There is also fierce competition for accounting-related positions. To shortlist individuals, the companies use a variety of processes. Selection of CVs, written tests, multiple rounds of interviews, group discussions, and more are all part of the process. So, if you’re a candidate or a commerce student, check out the top 10 accounting interview questions. Prepare your answers to any queries which might be asked. 

1. Tell us about yourself! 

Whether the interview is for accounting, art, medicine, or anything else, you will never attend one without being asked this question. Answering this question is not as simple as it appears. It is also an ice breaker question. You’ve already submitted your CV, and the interview panel is well-versed in all of your credentials and objectives. Explain your qualifications in relevance to the job you’re applying for. 

 Without being direct, persuade them that you are a wonderful fit for the accounting role. You might talk about your passion for accounting or any personal experiences that have influenced your interest in accounting or financial management. 

2. Why did you choose accounting as a profession? 

You might have different reasons to choose accounting as a profession. Make sure you answer this question professionally in an interview.  

Accounting is one of the most important sections of any business. It is not only about numbers and facts, it gives the opportunity to work in different fields. Also, the lessons learned in accounting and finance subjects are highly relatable to daily life too.  

3. How do you define accounting in your words and what are the different types of accounting? 

“Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof”. AICPA’s definition for accounting.  

As you are attending an interview after being a student, you may have the tendency to answer the by-hearted definition. But, pay attention to the question. As you are asked for your words, try to explain accounting in the way you conceived it.  

Different types of accounting are: Financial accounting, Cost accounting, Management accounting 

4. What is balance sheet? Name any three important terms used in a balance sheet. 

A balance sheet is one of the important financial statements of a company. It is a record of a company’s assets, liabilities, and shareholder equity. It is used to ascertain the financial position of a company on a particular date. Three terms used in a balance sheet are Accounts payable, Accounts receivable, Prepaid Expenses. 

5. Explain the different types of Inventories with examples? 

Raw materials: The unprocessed materials needed for the manufacture of the desired product. Example: Cotton for the textile industry, metals for the hardware industry 

Work in Progress: The partially finished or products under construction waiting for completion. Example: A half-assembled automobile  

Finished goods: The products which are ready for sale. Example: Vehicles, Electronic devices 

6. List out a few common accounting mistakes from a company’s side  

There are many common mistakes that people make while doing the accounts. Mention the most common ones.  

• Single account for personal and business transactions. 
• Failing to record transactions on time. 
• Not keeping the proofs of invoices, bills, etc. 
• Trying to do the calculations manually and maintaining a single record for everything. 
• Not checking the accounts in frequent intervals of time. 

7. Accounting is getting more digital and there are several applications and software to support accounting. What is your opinion about such innovations and are such applications replacing human labour in accounting? 

Accounting automation has an important role to play in the accounting process. It supports error-free and fast calculations, saves time, and in making accounting easy and simple. However, it cannot replace human force in accounting. It is an updated digital version of bookkeeping and it aids accountants to work smarter than harder.  

8. What is the full form of GAAP? 

Generally Accepted Accounting Principles 

9. Explain the latest changes introduced in Tax.

The answer to this particular question varies from place to place. You must be aware of new changes in tax, accounts, etc. At least you should have basic information about all such news. For example, if you are being interviewed by a UAE-based company, explain the new federal corporate tax introduced by UAE.  

10. Are accounting and auditing the same? If yes, how, and if no, why? 

No, accounting and auditing are related to each other but not the same. Accounting is the practice of keeping track of financial transactions. It records every transaction on time. Auditing is the process of verifying if the recorded events are correct. It determines the integrity of a company’s accounts. Any mistakes made while preparing the accounts are found while auditing.  

These aren’t the only questions asked in interviews; there are plenty more. However, many interviewers prefer to ask basic accounting questions rather than delve deeply into the subject matter. Before going to any interview, prepare yourself. Also, read the job description thoroughly before applying for any job. 

BEST OF LUCK! 

Aren’t you aware of the deadline to submit your work? You know when and how to fulfill your tasks. However, you may overlook the need to set aside time for taxes. We agree that working with all the numbers on the sheet is tedious, but it is necessary. Calculating taxes is a time-consuming process. Let us simplify the tax filing process for you by breaking it down into a few simple steps. Why should you waste your time learning how to pay taxes by reading pages and pages of information?

Benjamin Franklin once said, “In this world, nothing can be said to be certain, except death and taxes.” Taxes are that much certain. So, let us address the elephant in the room and learn the process without much trouble.

Taxes in UAE

• Individuals in the UAE are not subject to income tax at present.
• Oil corporations and international banks, on the other hand, are subject to corporate taxes.
• Excise taxes are imposed on some commodities that are known to be damaging to human health or the environment.
• The majority of goods and services are subject to VAT.
• The United Arab Emirates is imposing a federal corporate tax on business earnings for the first time. The new federal tax of 9% on profit would take effect on June 1, 2023.

What is VAT?

VAT stands for Value Added Tax. At each stage of the manufacturing, distribution, and sale of an item, VAT is levied on the gross margin.

Read: How VAT works in UAE? An overview. https://www.simpleaccounts.io/2020/09/08/vat-in-uae/

How to file VAT?

After each tax period, every taxable person in the UAE is supposed to file a VAT return with the Federal Tax Authority (FTA). The standard tax period is three months, so it is necessary to file taxes every three months. Also, there are taxes that are calculated every month too.

• The VAT returns must be submitted online only. The services are available on the FTA portal, eservices.tax.gov.ae.
• Login to the portal using Registered Username and Password.
• A summary of your active tax registration with FTA will be displayed on the dashboard.
• Click on the VAT tab on the navigation bar.
• Click on the VAT201- New VAT Return
• A window opens with all the information including Tax Registration Number (TRN), address, etc.
• It will be followed by details like tax period dates, VAT period reference number, VAT submission date, and more. Check whether the details are accurate.

How to pay VAT liability?

• Click on the My Payments tab on the navigation bar in the eServices portal.
• The window opens with the amount to be paid as VAT liability. It will be a total of any VAT liability due and applicable administrative penalties.
• Enter the amount you wish to pay. You need not pay the whole amount at once. But, paying it after the submission date may attract penalties.
• Pay the amount via GIBAN, eDebit, or the e-Dirham payment gateway. A fee is a collected for the payment.

VAT returns filing is easy as pie. Do it yourself. Also, keep track of all your taxes under one roof.

Imagine you’re shopping for a new washing machine and the cashier offers you a handwritten bill rather than a detailed invoice. Will you be satisfied with the shop? Will you ever visit the store again or recommend it to someone else?

If you are the service provider, consider yourself a customer to work in a customer-friendly manner.

Accounting automation aids in building a professional foundation for your company. Also, it contributes to giving excellent customer service. Customer satisfaction supports customer retention.

Accounting Automation ⏩ Better Service ⏩ Customer Satisfaction ⏩ Customer Retention ⏩ Profit

Role of automation in customer service

1. Higher Productivity

Any automated system’s principal purpose is to complete tasks in less time. Hence, using automated accounting software saves time. The time saved might be used to focus more on the product or service you offer.

Saved time means more time to focus on things like invention, creation, and strategy. Thus, client satisfaction gets priority.

2. Professional approach in everything

Accounting automation helps in generating detailed invoices, tax calculations, banking, and other accounting-related tasks. All of the system’s advantages serve in focusing on the professional manner of functioning.

3. Regular and easy services 

If you have an automated accounting system, it means you have all of the necessary records and information.

Customers may lose track of bills, warranty cards, and other documents. As a result, they may be unable to obtain services in the future. But, if you have the data saved, it won’t take much effort to recollect a customer’s details when they approach you for a service after a long time. Thus, it boosts your credibility.

Accounting automation works not just for accounting tasks alone, it provides more. Thus, make use of all the facilities provided by automated systems to build your business on a strong foundation of credibility, transparency, and customer service.