I use these 8 stamps almost every day in my business

I’ve been busy inputting a lot of source documents and my stamps are starting to fade .. I need to replenish my office supplies soon! And, then I thought ..

.. I wonder if it is interesting to anybody .. that I always use these same 8 stamps over and over …

1) POSTED – for when I’m entering information, other than cheque stubs … I will stamp the face of bank statements after they have been entered, copies or originals of posting sheets .. etc. I don’t want to see stuff later on and wonder if I’ve entered it into the general ledger

2) COPY – That’s my office copy stamp .. if this stamp is on it .. it will be filed appropriately, either in my correspondence file, my permanent file, the tax file .. etc

3) DRAFT – Unless it’s a final copy, I don’t care what it is .. if there is a chance that a third party or client will be seeing something that is a draft .. it is denoted as a draft. And this means every page, not just the coverpage

4) CLIENT COPY – Everything that goes back to the client, that is not their records in the first place, will be stamped client copy – except the bound copies of financial statements of course or unbound copies on colored paper with my official letterhead in color.

5) EMAILED – It’s hard to remember to keep all the emails to clients, but I do in two ways. Firstly, I maintain an “HBSMC CLIENTS” folder in my email system and one for every client. After I receive or write an email, I transfer it to the folder. For conversations that I delete the previous content, I will print out the last email and stamp it with my Emailed stamp and put it in my correspondence file, in latest date order. It’s just easer to remember.

>> BY THE WAY .. I keep two of these expandable filing systems near me next to my printer.. one for correspondence to be filed, and the other for unpaid bills and 2nd copies of client invoices

6) PAID – This is my “backup” stamp for when I am posting lots of information and need a stamp until I buy a new one! I used to stamp “paid” on every 2nd invoice copy that I kept in my 2nd expandable filing system .. but now I use this stamp to mark on the duplicate copy of my bank deposit book when I enter it into my own accounting receivable system for myself – so, I guess I still use it as another Posted stamp

7) F.Y.I. – works great for that added touch when I send fax cover sheets for compliant issues (like GST or PST is due soon and inform them what the amount is) or when you prepare working papers and give a client a copy for their files, or when you write a letter to Canada Revenue Agency on their behalf .. sometimes I just make a copy and send my client a duplicate.

FOR DEPOSIT ONLY TO THE CREDIT OF … – (Not Shown) – is the stamp that I use to stamp all client’s cheques when I deposit their payments into my own bank .. doesn’t everybody else have one of these two? Makes things easier than writing “for deposit to the payee only” on every cheque received

By the way … I prefer TRODAT brand of stamps .. in case anybody wants to send me any of the above stamps out of the goodness of their hearts (or office supply inventory!)

Just kidding (sort-of)

I was standing over the shoulder watching somebody add up some sport statistics … and I said … “Don’t forget to Cross-Foot it!”

He looked at me like I was nuts .. It was then that I remembered that not everybody is familiar with HART’s Tickmark Terminology

(okay .. did you look? That phrase is not part of wikipedia.org ~ YET ~ but one day! Some day! lol)

To familiarize yourself with HART’s Tickmark Terminology, I have replicated my favorite tickmarks and scanned them and provided a little example how I would use that tickmark. Now, I will elaborate further and describe when I would use this tickmark. Please keep in mind that everybody has their own tickmarks, and these are just HART’s favorites.

WHY DO YOU NEED TICKMARKS?

Tickmarks are used to indicate that some work was performed, usually in a different color, and give the reader confidence that some action related to that tickmark was done. They do not have to always be the same look or use all of the time, but generally it is best to be consistent with the using of your tickmarks. It helps to always document and identify the tickmarks that you are using in your working papers (or on other source data). Some usually just place the descriptions at the bottom of a working paper in the left side (because the right side is normally used to label the working paper). When I would be working on formal audit engagements, I would usually recap all of my tickmarks on the first page of each section so the reviewer would know what each mark meant as they would review the section.

I have scanned the tickmarks that I use, so feel free to click on them and look at the graphic while you are reading the below descriptions of how and why and where I would use these tickmarks. Please also keep in mind that while I have made up most of these names, but some do exist! In most cases, all are currently in use – perhaps even by your own accountant! Clicking on the following graphics will bring it into a new window.

* TICKMARK – This would be the general mark I use for most checking of source documents to other source documents. For instance, checking to see the cancelled cheques from the bank statements .. I would “tickmark” both the amount on the bank statement and also my printout list, if I were comparing what has cleared the bank.

* TICK – I would use this as my second most general mark, which I use to denote that I have looked at that number. It doesn’t necessarily means that I compared it to any other number. However, I tend to use these when I am reconciling bank statements. For those cheques dated PRIOR to the current month, I would just “tick” the cheques dated previous month and cleared the current month.

* DOUBLE TICK – I normally reserve the use of this tick to denote cheques that cleared in the current month that were dated longer than one month. The “double tick” would be used for cheques dated two months ago. I also would have a “triple tick” if the cheque was dated three months ago .. and so on, and so on.

* FOOT – This is the figure that I use to denote that I have added the immediate column of numbers above it. For instance, if I add up all of column (A) and then compared it to the printed total and it agreed, I would use this symbol. While this looks like your upper shift 6 on the computer keyboard, I normally have the right side longer than the left side. I suppose if I was left handed, I might do it in reverse.

* CROSS FOOT – This is the figure that I use to denote that two or more figures add up sideways to another total. For instance, if I added up columns (A) and (B) and “foot” them both, then I add the totals and foot the footed totals, and the numbers agreed, then I have “cross footed” the numbers. This helps show that all extensions were extended correctly.

* TICKMARK WITH A TICK (or) OOPS! I HAD TO DOUBLE CHECK THESE! – Sometimes, with the interuptions that can happen during a normal workday (phone, door, TV, music, blogging, pets, etc) it is possible that you might make mistakes and have to double check your figures. The way I do this, is to just put a reverse tick on the end of the tickmark. This could also work when double checking “ticks” and “double ticks” besides on “tickmarks”.

* CHECKMARK (or) AGREES – I usually reserve my checkmarks for either directly comparing two objects or figures, to show that “these figures agree” or “these figures are correct”. Perhaps I will put it somewhere around the bottom and right side to show that “this page works” or “this page is complete”. I might also use this tickmark to show that I recalculated the figures .. e.g. to prove that an invoice $100.00 plus pst plus gst really was $114.00 etc etc.

* ZERO WITH A HORIZONTAL LINE THROUGH IT (or) HERO – I like this tickmark, because it doesn’t look like any other tickmark. Even for myself and my own working papers, where nobody is reviewing my own work, I always 100% describe at the bottom of the working paper what this symbol represents. For instance, I might use this to denote that a cheque on the outstanding cheque list has not cleared the bank since the year end, or to denote that I reviewed signatures on all the cheques, they were all approved signatures, and no exceptions. Stuff like that.

* ZERO WITH A VERTICAL LINE THROUGH IT (or) VERO – Same thing as above, on a similar thought, but different topic. I always describe what this tick mark, if seen, represents.

* X (or) EX (or) NOT – I would use this in two situations … for something that doesn’t belong or does not agree to another source … or, when I am sick of using tickmarks or ticks – I’ll just use “x” instead! Of course, if you do not have a really fine point pencil or pen I do not suggest using it – especially if your pen is leaky.

* CHECKMARK WITH A TICK ON IT (or) NOT AGREES – I usually use this when comparing my calculation to other calculations, and doesn’t necessarily mean that the number is wrong. For instance, testing calculations of prepaid expenses when the client uses a rough calculation 1/12 of $1200 = $100 .. when, it might be consistent to use 31/365 x $1200 = $101.92 … stuff like that more or less shows that I did recalculate the figure.

* DOUBLE TICK WITH A STROKE THROUGH IT (or) TRACK – The “track” as I like to call it is like a number sign, but with only one vertical line. I would probably be describing it’s meaning at the bottom of the list, after all other tickmarks that I have come up with are used.

* TROOK – Again, similar to the “track” .. when I need more tickmarks to describe things .. except that while it’s also like a number sign, it only has one horizontal line

* CIRCLE – I use the circle to get my attention. For instance, when I am reconciling the bank I will tick off the cheques to the bank statement in the order they were delivered with the bank statements, and the non-cheque or ‘bank statement items’ such as withdrawals, debit memo’s, loan payments, pre-authorized stuff, bank charges, etc etc .. I would circle the number. (As an off-topic note, after I tick off all cheques from the bank statements, I like to sort the cheques in numerical order for future readability in case I have to trace a cheque down)

* CIRCLE WITH A TICK (or) GOT IT! – After I circle numbers or things that ‘get my attention’ .. I have to do something with it. I just tick the circle to let me know I took care of it – either booking the entry, recapping the bank statement item, locating an invoice, etc etc.

* LETTERS AND NUMBERS – There will never be a standardize reason to use these .. but because they might conflict with what you are checking, I circle all of mine, if used. I use the circled letters for exceptions, and will always provide more of a detailed description at the bottom of the page. I would use the circled numbers when I am trying to summarize a whole bunch of figures in a column, and want to group them into 3 or 4 different categories. I would say put e.g. a circled 1 next to all the repairs and maintenance figures, then add them up and at the bottom of the page I would put the circled 1 and the total next to it.

There! I hope that helps you with HART’s Tickmark Terminology, and that you find the above descriptions useful in your accounting and bookkeeping adventures .. so next time you are reading my blog entries (or listening to my awful jokes) and slip in a “tickmark” reference … you will smile and say .. “I know what he meant! I get it!”

According to Canada Revenue Agency:
IT-417R2 Prepaid Expenses and Deferred Charges

¶ 2. A prepaid expense occurs where an outlay or expense has been made or incurred by a taxpayer in a particular taxation year and it represents, for example, all or part of the cost of services which will be provided to the taxpayer after the fiscal year end. For example, a premium paid in advance to obtain a fire insurance policy, which provides protection for a period extending beyond the year in which the expenditure was made, is one type of prepaid expense.

Prepaid expenses usually play part-in-parcel with the “Accrual Accounting” concept of accounting and bookkeeping. Expenses are deductible in the business – made in anticipation of profit. Profit would normally be taxed on a fiscal or calendar year basis. The government doesn’t want you to deduct next year’s expenses against this year’s income. It’s common sense.

It makes great sense to consider setting up Prepaid Expenses in your financial statements for two important reasons:

Here are a few examples of prepaid expenses, assuming your Year-End is December 31.

You pay your rent of $500 on the 1st of every month. During X-Mas, you give your landlord a cheque for January’s rent and he cashes it on December 28.

You would want to set-up $500 in Prepaids.

You pay your Mortgage payment on the 20th day of every month, which includes principle and interest (per some amortization schedule) plus a portion of property taxes. Generally, banks will pay your property taxes on a specific date – and let’s say it is June 30th. Starting with the July payment they want you to pay at least 1/12′th of this amount with your mortgage payment. Let’s say that they paid $2,400 and your new tax amount is $200 extra per month.

You would want to set-up $200 x 6 = $1,200 Prepaid Property taxes in Prepaids. There may be a separate bank account for the property tax collection and remittance by the mortgage company. In these cases I would include the bank balance with the Prepaid Expenses, not the Cash accounts. By the way, it would not matter what the day of the month the payment was made. The property taxes were paid in full June 30th, all payments made in the calendar year after that is Prepaid for next year.

You pay your insurance company the annual insurance policy in three payments, May 2, June 2 and July2 … each for $1,500. The term of your insurance is from May 2/xxxx to May 1/xxxx

In this case, you paid the entire amount, $1,500 x 3 = $4,500. The prepaid portion is the amount of this policy that is good after the year end of December 31 .. from January 1 to May 1 … which is 121 days (122 days in a leap year). The amount of $4,500 x 121/365 = $1,491.78 would be setup in Prepaids.

Now, in a similar scenario, suppose your annual insurance policy in three payments is due November 2, December 2, and January 2 .. each for $1,500. The term of your insurance is November 2/xxxx to November 1/xxxx

In this case, you would have only paid for two payments. You can calculate Prepaids in two ways. I may choose to do it either way, but normally that decision is based on keeping it consistent with the prior year. In the first method, you would set-up an accrued accounts payable for the balance owing on the insurance policy (due January 2) and then calculate your prepaid normally as above. In the second method, you just calculate your prepaid based on what you paid. Both ways will give the same expense amount. The portion prepaid will be from January 1 to November 1 or 305 days (306 days in a leap year). For example:

In this case, the prepaid (if 100% paid) would be $1,500 x 3 = $4,500 x 305 / 365 = $3,760.27 but, you would deduct the unpaid 3rd instalment of $1,500 – so the final prepaid amount would be $2,260.27.

To check this calculation, do it in reverse. You paid $3,000 less $2,260.27 leaves an expense of $739.73.

The insurance policy that covers this fiscal year would be from November 2 to December 31 (if paid in full) would be $4,500 x 60/365 = $739.73

Suppose you are paying your Property Taxes and Business Taxes directly to the City in 12 monthly TIPP (tax instalment payment plan) payments – What happens?

If your Year-End is also December 31, there wouldn’t be any prepaids in this case. If your Year-End falls on any other month-end date, there still wouldn’t be any prepaids set-up. Your General Ledger already has 12 monthly payments in it.

Suppose you are payng your Property Taxes and Business Taxes directly to the City in 10 monthly TIPP (tax instalment payment plan) payments, and your Year-End is June 30th – What happens?

First of all, I would be consistent with the previous year, in determining whether I would set-up a prepaid or not. But, technically, there will be a prepaid amount. It may not be significant, though and you might end up ‘passing’ on the booking of this entry, but you should calculate it at least once in a while.

Let’s say your taxes is $2,400 per year, you pay over 10 months at $240 per month, and your year end is June 30th. For this scenario, it is better to look at what SHOULD be recorded in the current fiscal year, rather than looking at what amounts relate to future years. In this case, since property taxes are for a calendar year only, the amount of the current years’ property taxes of $2,400 that relate for the period January 1-June 30 would be x 6/12 = $1,200.

On your TIPP plan, you paid $240 x 6 = $1,440 but only $1,200 should be the expense, so the prepaid amount that you would set-up in this case should be $240.00

Are the calculation of Prepaid Expenses always this simple HART?

There are many aspects to Prepaid Expenses, that you should consider – besides … insurance, taxes, and rent. Other examples could be:

This is not a inclusive list of examples, just stuff I normally come across during the preparation of my client’s files and Year-End financial statements.

Take care.
HART
1800HART.com

I have complete filing system in my basement. It holds all of my client’s Personal Tax Files and all the Corporate Files. I call this shelf my “Current” files. Last year, I took the time to pull out all of the older files and previous years’ files and place them in a banker box. Naturally, I documented each box by adding its contents into an Excel file, and numbering the box. I have 42 banker boxes stacked up in the corner of my basement, and this is what I call my “Archive” files. The boxes are stored on raised two-by-fours in case there might be accidental flooding in my basement. I have kept all of the archive files for exising clients because you just never know when you need to find information. Some clients and files date back to 1971 and I have one client that started in 1959. I just went on my own in March 2003, but after working with my father in his Chartered Accountancy firm for the past 18 years before it, I felt it best that I maintained all of the archived files in my possession when he retired. The clients that did not stay with me, or that I did not want to keep … I shredded those files when I started, at the permission of my father.

When I say FILES …. I do not mean your standard folding files or letter and legal sized files that you place in hanging folders. Here is a picture of what I mean:

I use ACCO or noname or Office Depot brand “Prong Paper Fasterners” with 2″ capacity and with compressors, with 2-3/4″ centers, which is the standard two hole punch size.

For all files, the latest information is punched with two-holes and placed ON TOP in the file. I never sort out information in the file, because it makes better sense to me to have the latest work done on the top and the oldest work done on the bottom. If the file gets too thick (about 1-3/4″ thick), I mark the file as “File #1″ with comment on the cover “see File #2 for filing”. I will keep the immediately preceding File # with my Current files, and if there is a third file, I will move the oldest file into my Archive files and update my excel database.

I will dedicate pictures of my basement and filing systems at a later time .. when it is better organized

Files of my Personal Income Tax Clients

PERSONAL TAX FILE – I have one file for every client. All information each year is just added to the top of the file. This way, when I pull a file out – I will have all of the information.

Files of my Corporate Account Clients

CURRENT FILE -I create a new file every fiscal year. Only the current year is included in the file, and during the year, if there are any notes or sheets required for the following year, I will place them at the top of the file. There will be a future article documenting how I prepare a file, the order of the documents and its contents inside this file. I normally keep three years of Current Files in my “current” filing shelves. When I am on the fourth year, I will pull the oldest file and place in my “archive” filing system that I described above.

>> All other files are maintained and numbered until they are too full to handle, with the latest information at the top of the file.

PERMANENT FILE – I will keep articles of incorporation, leases, copies of invoices for major capital expenditures, and any other permanent natured information such as share certificates, etc.

CORRESPONDENCE FILE – I keep all email correspondence, letters to clients, lawyers and any training instructions or manual I might have written that is specific for a client in this file. I will keep all letters to lawyers for dividends declared and copies of any resolutions I might receive.

CORPORATION TAX FILE – This is where I keep all of the T2 Corporation Income Tax Returns and any Notice of Assessments, or correspondence to and from Canada Revenue Agency. I prefer to keep tax correspondence in this file opposed to the correspondence file for obvious reasons to me.

T4 / T4A / T5 / WCB FILE – All the annual T4s, T4As, T5s .. both summaries and supplementaries .. are kept in here. There is usually a Typing Report attached to each year’s copy, plus a copy of an Enclosure Letter to my client in here. If I prepare the monthly payroll calculations, the reports will also go in this file. A lot of the time, clients will inform me of departing employees and new employees, their rates, date of birth, social insurance numbers, etc .. I will keep that information in here for the time, just in case, that I have to prepare a Record of Employment.

FINANCIAL STATEMENT FILE – This is the file where I keep all the original and final typed financial statements used in the preparation of the income tax return and the current file. There is also an original copy in my Current File (with color letterhead). In this file, I always attach a Typing Report that documents when the info came in, when it came out, when I prepared the Tax Return, when the tax return was filed, how many bound copies needed, how many unbound copies needed, and when it was delivered to the client. I also ask my client to sign in the “Approved By The Board” section on the Balance Sheet, to acknowledge that I have gone through the statements with them, and explained everything.

MONTHLY FILE – Obviously, this if for my monthly accounts. I keep track of monthly accounting by keeping all copies of bank statements, and monthly statements in a file, separated by a legal size sheet of paper. It usually lasts for about four months before I have to start File #2 (or the next number in line).

GST / PST FILE – If I am preparing the returns, I keep them all together. Chances of if a business will get audited, it will first be the sales tax collectors. So, I put everything inside the file, including a copy of the return and any assessments received, in the order that returns were prepared. If there was ever an audit, I could just hand over this one file, instead of all of the files … usually that’s all that may be needed.

OTHER FILES – Honestly .. I have so many danged file folders that if I think it is best to start a new file for a unique topic or situation – I do it. Why not?! Acco paper fasteners are cheap, and its easier to keep similar information together.

Well, that’s how I keep my client files, which by the way – are my property – not the clients. However, as I suggested in an the previous article (or next article if you are reading down the page) about keeping records, I am subject to the same rules just as everybody else is.

It’s always best to be organized and if something works for you, you should follow it. The above filing system works for me.

Take care.
HART
1800HART.com