![]() Keeping in mind that payroll is the largest expense in any agency, the productivity of the account managers is directly related to the profitability of the agency. Scarcity of quality employees has a profound impact on agency performance and profitability, since less qualified employees often are filling the void.Īccount managers make up roughly half of all employees in an agency. Current low unemployment rates exacerbate the lack of AMs availabile on the open market. Agencies tend to “steal” the good ones from each other. Note: Moving expenses for plaster from the Lab Supplies expenses account to the Plaster expenses account.It is often quite hard to find or develop good account managers. If she had already spent $2,000 on plaster up to that point, the adjusting entry would look like this: Account She would then make an adjusting entry to move all of the plaster expenses she already had recorded in the “Lab Supplies” expenses account into the new “Plaster” expenses account. To do this, she would first add the new account-“Plaster”-to the chart of accounts. ![]() Instead of recording it in the “Lab Supplies” expenses account, Doris might decide to create a new account for the plaster. Let’s say that in the middle of the year Doris realizes her orthodontics business is spending a lot more money on plaster, because her clumsy intern keeps getting the water to powder ratio wrong when mixing it. If you delete an account in the middle of the year, it might mess up your books. The rules for making tweaks to your chart of accounts are simple: feel free to add accounts at any time of the year, but wait until the end of the year to delete old accounts. The way that the balance sheet and income statement accounts interact with each other is complex, but one general rule to remember is this: revenues increase your company’s equity and asset accounts, while expenses decrease your assets and equity. Revenue accounts keep track of any income your business brings in from the sale of goods, services or rent.Įxpense accounts are all of the money and resources you spend in the process of generating revenues, i.e. We use the income statement accounts to generate the other major kind of financial statement: the income statement. They basically measure how valuable the company is to its owner or shareholders. They represent what’s left of the business after you subtract all your company’s liabilities from its assets. “Unearned revenues” are another kind of liability account-usually cash payments that your company has received before services are delivered.Įquity accounts are a little more abstract. Liability accounts usually have the word “payable” in their name- accounts payable, wages payable, invoices payable. Liability accounts are a record of all the debts your company owes. ![]() They can be physical assets like land, equipment and cash, or intangible things like patents, trademarks and software. There are three kinds of balance sheet accounts:Īsset accounts record any resources your company owns that provide value to your company. ![]() We call these the “balance sheet” accounts because we need them to create a balance sheet for your business, which is one of the most commonly used financial statements. This one is for a fictional business: Doris Orthodontics.Īs you can see on the right, there are different financial statements that each account corresponds to: the balance sheet and the income statement.
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