Virtual Coffee Break - Chat

The heat finally broke a bit, so everything’s feeling a lot more manageable 😉

Looks like the gears are finally turning...🙂

vitas said:I’ve got this one client who hasn't bothered tracking small inventory items. Instead of booking supplier invoices to assets for depreciation and eventual write-offs, they just dump everything straight into expenses... basically, the invoice is booked as

/2200
1400/
4040/

They've been doing it this way for years... is that actually okay?

To be honest, that's how I've always handled it😍 and I don't see any reason to change since I end up writing off the entire inventory every single year anyway...

Since we’re talking about small office supplies I’m just writing them off immediately too.

It feels like I’m the only idiot who isn't doing this 😠

Henry Edwards33 said:It feels like I’m the only idiot who isn't doing this 😠

nah 🙂you're

Henry Edwards33 said:It feels like I’m the only idiot who isn't doing this 😠

It’s the same thing in the end if you're trying to write out every little detail... I just don't have the energy for it...

And if there's some kind of issue where things aren't being fully written off... I'm setting that at a 3...

It’s not 😠
You basically need some high-level emotional intelligence and then hawk a hundred different useless products 😠

My head hurts 😬

Henry Edwards33 said:It’s not 😠
You basically need some high-level emotional intelligence and then hawk a hundred different useless products 😠

My head hurts 😬

Who on earth would want to buy low-value office supplies??? Who am I supposed to sell old chairs to once they've already seen better days?

I’m dying to know what that phone call would even sound like... some buyer calling me up because they saw an ad in the local paper for a three-year-old stapler priced at $1.75 (negotiable, maybe)...😂

So, you can take this whole "selling off assets" idea and shove it... I throw away my old equipment when it's no longer useful... and if anyone thinks that breaks some corporate rule, I'll be sure to invite an IRS agent over to watch me toss an old stapler into the trash bin so they can file a report...

As for tracking small inventory, I do that for my own sanity, not for some auditor... just so I don't end up buying something I already have tucked away in some filing cabinet somewhere...

Timothy Morgan38 said:To be honest, that's how I've always handled it😍 and I don't see any reason to change since I end up writing off the entire inventory every single year anyway...

Well, here’s my situation. I just took over the books for a company where the previous shop used to stash all their small supplies under account 35. The problem? They only ever wrote off a tiny fraction of it because they were too busy padding their profits to deal with actual accounting. Now, I'm stuck dragging around about $40 thousands in unwritten-off small inventory. If I decide to write it all off now, the company is going to show a massive loss on paper. Wouldn't that look suspicious to an auditor? What am I even supposed to tell them if someone starts asking questions...

Kimberly Harris6 said:Well, here’s my situation. I just took over the books for a company where the previous shop used to stash all their small supplies under account 35. The problem? They only ever wrote off a tiny fraction of it because they were too busy padding their profits to deal with actual accounting. Now, I'm stuck dragging around about $40 thousands in unwritten-off small inventory. If I decide to write it all off now, the company is going to show a massive loss on paper. Wouldn't that look suspicious to an auditor? What am I even supposed to tell them if someone starts asking questions...

And there you have it... that's what happens when you play fast and loose with the numbers...🙂😂

Kidding aside...

Just write it off gradually over the next few years... have them perform a physical inventory count to see what they’re actually using, keep that on the books at $3, and then slowly phase out the rest of the junk that isn't being utilized... think of it like depreciation...

As for whether it catches anyone's eye? That's secondary. At the end of the day, you have to report fair market value... your excuse during any audit would simply be that a year-end inventory was conducted—as required by US accounting standards—and the obsolete small inventory was written off accordingly... nobody can argue with that... it shouldn't be an issue... unless, of course, they were using the small inventory account to fund personal shopping sprees, which could be flagged as an undocumented expense... but that wouldn't be your fault since you weren't the one pulling the strings...

People seriously need to realize they can't just do whatever they want and then expect the accountant to swoop in and fix the mess later... you can't buy everything under the sun on the company dime and then whine when you don't want to show a loss on the balance sheet...

Timothy Morgan38 said:And there you have it... that's what happens when you play fast and loose with the numbers...🙂😂

Kidding aside...

Just write it off gradually over the next few years... have them perform a physical inventory count to see what they’re actually using, keep that on the books at $3, and then slowly phase out the rest of the junk that isn't being utilized... think of it like depreciation...

As for whether it catches anyone's eye? That's secondary. At the end of the day, you have to report fair market value... your excuse during any audit would simply be that a year-end inventory was conducted—as required by US accounting standards—and the obsolete small inventory was written off accordingly... nobody can argue with that... it shouldn't be an issue... unless, of course, they were using the small inventory account to fund personal shopping sprees, which could be flagged as an undocumented expense... but that wouldn't be your fault since you weren't the one pulling the strings...

People seriously need to realize they can't just do whatever they want and then expect the accountant to swoop in and fix the mess later... you can't buy everything under the sun on the company dime and then whine when you don't want to show a loss on the balance sheet...

I wouldn't say this specific case was about buying personal items... generally speaking, both the owner and the company were fine during the first half of the year. Now, they're basically on the verge of shutting down, unless some miracle happens...
The previous service provider left behind a massive mess of unresolved issues... not to mention the chaos with customers and vendors; this balance in accounts receivable is just one of many disasters. If a balance exists, there should be an inventory list to back it up, but there isn't even that here, so the whole thing was just pure guesswork.

Kimberly Harris6 said:I wouldn't say this specific case was about buying personal items... generally speaking, both the owner and the company were fine during the first half of the year. Now, they're basically on the verge of shutting down, unless some miracle happens...
The previous service provider left behind a massive mess of unresolved issues... not to mention the chaos with customers and vendors; this balance in accounts receivable is just one of many disasters. If a balance exists, there should be an inventory list to back it up, but there isn't even that here, so the whole thing was just pure guesswork.

And why is everyone so terrified of showing a loss? Just show it... at least they won't be paying corporate income tax next year if things actually pick up...

If the loss is the actual reality of the situation, then it needs to be reported...

Personally, I run into situations all the time where accountants try to "massage" the numbers in all sorts of ways just to hide a loss—stuff like inflating inventory, delaying legitimate expenses, or misclassifying costs as loan repayments...

It’s all short-sighted because eventually, those numbers have to be reconciled. And I really don't get the logic behind bloating inventory or whatever else... what kind of reasoning leads you to believe that a company which couldn't even generate enough revenue this year to cover its own materials and payroll will magically make enough next year to cover both last year's deficit AND the current year? There's zero logic there, unless you're expecting some massive, sudden surge in business... which rarely happens...

So instead, they report these unrealistic profits while generating a massive, hidden loss that will inevitably have to surface later. In my opinion, it's better to face the music and report a $100,000 loss now and start next year with a clean slate, rather than playing games only to be hit with a $500,000 loss five years down the road... better five rounds of $100,000 than one giant $500,000 blow...

Timothy Morgan38 said:And why is everyone so terrified of showing a loss? Just show it... at least they won't be paying corporate income tax next year if things actually pick up...

If the loss is the actual reality of the situation, then it needs to be reported...

Personally, I run into situations all the time where accountants try to "massage" the numbers in all sorts of ways just to hide a loss—stuff like inflating inventory, delaying legitimate expenses, or misclassifying costs as loan repayments...

It’s all short-sighted because eventually, those numbers have to be reconciled. And I really don't get the logic behind bloating inventory or whatever else... what kind of reasoning leads you to believe that a company which couldn't even generate enough revenue this year to cover its own materials and payroll will magically make enough next year to cover both last year's deficit AND the current year? There's zero logic there, unless you're expecting some massive, sudden surge in business... which rarely happens...

So instead, they report these unrealistic profits while generating a massive, hidden loss that will inevitably have to surface later. In my opinion, it's better to face the music and report a $100,000 loss now and start next year with a clean slate, rather than playing games only to be hit with a $500,000 loss five years down the road... better five rounds of $100,000 than one giant $500,000 blow...

I'm with you on this one.

Timothy Morgan38 said:And why is everyone so terrified of showing a loss? Just show it... at least they won't be paying corporate income tax next year if things actually pick up...

If the loss is the actual reality of the situation, then it needs to be reported...

Personally, I run into situations all the time where accountants try to "massage" the numbers in all sorts of ways just to hide a loss—stuff like inflating inventory, delaying legitimate expenses, or misclassifying costs as loan repayments...

It’s all short-sighted because eventually, those numbers have to be reconciled. And I really don't get the logic behind bloating inventory or whatever else... what kind of reasoning leads you to believe that a company which couldn't even generate enough revenue this year to cover its own materials and payroll will magically make enough next year to cover both last year's deficit AND the current year? There's zero logic there, unless you're expecting some massive, sudden surge in business... which rarely happens...

So instead, they report these unrealistic profits while generating a massive, hidden loss that will inevitably have to surface later. In my opinion, it's better to face the music and report a $100,000 loss now and start next year with a clean slate, rather than playing games only to be hit with a $500,000 loss five years down the road... better five rounds of $100,000 than one giant $500,000 blow...

Honestly, I agree. If I were in their shoes, I would have faced the music immediately. But they kept getting all sorts of "expert" advice... for instance, they had a crew stealing inventory and creating a huge deficit, and instead of being honest about it, people advised them to just cover it up by buying stock off the black market. Now, they've been playing this dangerous game for years, the gap keeps growing, and they're eventually going to be forced to come clean anyway. The only difference is that instead of dealing with the original shortfall of roughly $6.75, they'll be staring down a deficit three times that size..🙂

Whether they lose their cool or try to give us advice, they’re just going to keep doing things their own way anyway. 🤷

It’s honestly just a waste of energy and a drain on your sanity. ☕

How’s everyone holding up?

I keep telling myself I need to stay chill, but honestly, some of these idiots are testing my patience more than I can handle.🙂

Has anyone actually attended a worthwhile seminar lately? ☕

Are there any 🤷
like this?

I’m planning to head out there on December 2nd—it might actually be worth the trip 🙂

Where do you think you're going, Kimberly Harris6?