Finance and Business Blog

A computer virus has stolen the bank account and credit card details of around 500,000 financial institutions.

The Sinowal trojan has been around for about two and half years and has been tracked by security solutions provider, RSA. According to RSA, the Sinowal trojan has infected computers all over the world.

Sean Brady of RSA’s security division said:

“The effect has been really global with over 2000 domains compromised.”

“This is a serious incident on a very noticeable scale and we have seen an increase in the number of trojans and their variants, particularly in the States and Canada.”

According to Mr Brady, more than 270,000 banking accounts and 240,000 credit and debit cards have been compromised from hundreds of thousands of financial institutions in countries including the US, UK, Australia and Poland.

The Sinowal has been described by RSA as ‘one of the most serious threats to anyone with an internet connection’ because it works behind the scenes using a common infection method known as ‘drive-by downloads’.”

The RSA’s Fraud Action Research Lab said it first detected Sinowal in Feb 2006. Sean Brady said:

“One of the key points of interest about this particular trojan is that it has existed for two and a half years quietly collecting information,”

“Any IT professional will tell you it costs a lot to maintain and to store the information it is gathering.”

“The group behind it have made sure to invest in the infrastructure no doubt because the return and the potential return is so great.”

Taking Action

While the number of attacks is increasing, there are a few simple steps web users can take to protect their information in addition to using security software.

Derek Manky of Fortinet, said:

“We have a saying here which is ‘think before you link’.”

“That just means observe where you are going on the web. Be wary of clicking on anything in a high traffic site like social networks.”

“A lot of traffic in the eyes of cyber criminals means these sites are a target because to these people more traffic means more money.”

In accountancy, the double-entry bookkeeping (or double-entry accounting) system is the basis of the standard system used by businesses and other organizations to record financial transactions. The modern double-entry bookkeeping system was first codified by the Italian mathematician Luca Pacioli, in his Summa de arithmetica, geometrica, proportioni et proportionalità (Venice, 1494). Its premise is that a business’s (or other organization’s) financial condition and results of operations are best recorded in accounts. Each account maintains a “history” of changes in monetary values about a particular aspect of the business.

This system is called double-entry because each transaction is recorded in at least two accounts. Each transaction results in at least one account being debited and at least one account being credited, with the total debits of the transaction equal to the total credits.

For example, if Business A sells an item to Business B and Business B pays Business A by cheque, the bookkeeper of the Business A would credit the account called “Sales” and debit the account called “Bank”. Conversely, the bookkeeper of Business B would debit the account called “Purchases” and credit the account called “Bank”.

Historically, debit entries have been recorded on the left hand side and credit values on the right hand side of a general ledger account. The ledger accounts are set up as T accounts so called because they resemble the letter T when the account is empty.

History
The origins of a primitive double-entry system has been traced as far back as the 12th century to accounting in the Islamic world. Some sources suggest that Giovanni di Bicci de’ Medici introduced this method for the Medici bank in the 13th century. The earliest extant records that follow the modern double-entry form are those of Amatino Manucci, a Florentine merchant at the end of the 13th century. By the end of the 15th century, the merchant venturers of Venice used this system widely. Luca Pacioli, a monk and collaborator of Leonardo da Vinci, first codified the system in a mathematics textbook of 1494. Pacioli is often called the “father of accounting” because he was the first to publish a detailed description of the double-entry system, thus enabling others to study and use it.

Double-entry bookkeeping was initially introduced in Japan during the Meiji period in the 1870s. The newly-established Japan Mint was the earliest Japanese government institution to begin using double-entry bookkeeping in its Osaka headquarters.

The bookkeeping and accounting process
In the normal course of business, a document is produced each time a transaction occurs. Sales and purchases usually have invoices or receipts. Deposit slips are produced when lodgements (deposits) are made to a bank account. Cheques are written to pay money out of the account. Bookkeeping involves recording the details of all of these source documents into multi-column journals (also known as a books of first entry or daybooks). For example, all credit sales are recorded in the Sales Journal, all Cash Payments are recorded in the Cash Payments Journal. Columns in the journal normally correspond to an account. In the single entry system, each transaction is recorded only once. Most individuals who balance their cheque-book each month are using such a system, and most personal finance software follows this approach.

After a certain period, typically a month, the columns in each journal are each totalled to give a summary for the period. Using the rules of double entry, these journal summaries are then transferred to their respective accounts in the ledger, or book of accounts. The process of transferring summaries or individual transactions to the ledger is called Posting. Once the posting process is complete, accounts kept using the “T” format undergo balancing which is simply a process to arrive at the balance of the account.

To quickly check that the posting process was done correctly, a working document called an unadjusted trial balance is created. In its simplest form, this is a three column list. The first column contains the names of those accounts in the ledger which have a non-zero balance. If an account has a debit balance, the balance amount is copied into column two (the debit column). If an account has a credit balance, the amount is copied into column three (the credit column). The debit column is then totaled and then the credit column is totaled. The two totals must agree - this agreement is not by chance - it happens because under the double-entry rules, whenever there is a posting, the debits of the posting equal the credits of the posting. If the two totals do not agree therefore, an error has been made in either the journals or made during the posting process. The error(s) must be located and rectified and the totals of debit column and credit column re-calculated to check for agreement before any further processing can take place.

Once there are no errors, the accountant produces a number of adjustments and changes the balance amounts of some of the accounts. For example, the “Inventory” account and “Office Supplies” asset accounts are changed to bring them into line with the actual numbers counted during a stock take. At the same time, the expense accounts associated with usage of inventory and with the usage of office supplies are adjusted. Other refinements necessary to ensure that accounting principles are complied with are also done at this time. This results in a listing called, not surprisingly, the adjusted trial balance. It is the accounts in this list and their corresponding debit or credit balances that are used to prepare the financial statements.

Finally, financial statements are drawn from the trial balance, which may include:

• the income statement, also known as a statement of financial results, profit and loss statement, or simply P&L
• the balance sheet
• the cash flow statement
• the statement of retained earnings

Source:
http://en.wikipedia.org/wiki/Double-entry_bookkeeping_system

Earnings Tracker - FREE Accounting / Bookkeeping Software Tool

Paper self-assessment tax returns must be submitted today or a £100 fine will be imposed. However, forms delivered to Revenue offices by hand will be accepted before those offices open on Tuesday, 4 November provided those offices have a letterbox.

An increasing number of people are switching to filing tax returns online, 30% more than this time last year. There are about nine million people in the self-assessment system and 1.8 million people have already submitted their income tax details online. Bringing forward the deadline for paper returns from 31 January to 31 October seems to have provided the impetus for people to switch to internet filing. The deadline for filing online is still the 31 January. 

Each year the government collects taxes from us to pay for all its spending requirements: hospitals, schools, and so on. However, if the government spends more money than it raises, it needs to borrow some. The amount it needs to borrow is known as the Public Sector Borrowing Requirement (PSBR), and the amount still outstanding on the loan is known as the National Debt. But who does the government borrow from?

The government borrows the money this way: It prints and sells “gilt edged securities”, also known as stocks, bonds and Treasury bills. These are simply pieces of paper which promise an additional return to the buyer, sometime in the future. The securities are auctioned several times a year to meet the shortage of government revenue as it arises. They are bought by individuals, insurance companies, pension funds, trust funds, and banks. The government takes the money it has raised by these sales, and spends it on its public projects.

When the non-banking sector (individuals, insurance, pension and trust funds) buy government securities, saved money is being recycled back into the economy through government spending.

However, when banks buy government securities, entirely new money - which has been created out of nothing by the banks specifically for these purchases - is spent into the economy by the government.

These securities are becoming due, or “maturing” regularly. Servicing these securities is known as “paying the interest on the National Debt”. The government has to find the money to repay them in full.

Of course, the government does not have the money to repay them - that is why it had to sell securities in the first place. Therefore, how does it repay them? Answer: It raises the money to repay the previous securities by selling even more securities and by putting up taxes even further.

That is to say: The government is raising money it doesn’t have, by printing bits of paper and selling them to banks, which buy them with money they don’t have either, but which they create out of nothing. The government then expects us, through our taxes, to pay back the banks with the real money that we’ve worked for.

source: http://www.sovereignty.org.uk/features/articles/root4.html

Competition between manufacturers of smartphones like the iPhone and the G1 Google phone is tough. BlackBerry, the market leader, is responding to this challenge to its market position by introducing three very different new BlackBerry models. The first is the BlackBerry Pearl Flip 8220. The second is the beautifully designed BlackBerry Bold 9000 and finally there is the Blackberry Storm, with touch screen. This third phone is not yet available for review.

New software allows for fully formatted e-mail. In addition, Word, Excel and PowerPoint attachments can be opened up, to enable editing. There is also an improved web browser with a ‘trackball’ which can be clicked to zoom in. Both phones also have a two-megapixel camera, with a tiny flash, that can also record video. In addition, they are both quad band.

The Flip model is intended for the consumer market and is half the price of the Bold. The price differential is justified in terms of functionality and sleek looks. The Bold is a very fast minature computer and has a gigabyte of storage built in.
 

On Tuesday, at a conference held in Los Angeles, Microsoft demonstrated Windows 7, the latest version of its desktop operating system.

This version is designed to start much faster than Vista due to a reduction in the number of built in packages such as email, photo editing and movie editing.

The new operating system will probably be launched towards the end of 2009 or the beginning of 2010.
 

Friday October 31 is the dealine for filing tax returns on paper.

There are two deadlines this year: October 31 for paper returns, and January 31 for those filed online. Failure to meet the deadline could result in a £100 fine.

HMRC says that if you want to avoid a last-minute rush, it nmakes sense to switch to online filing. It said:

“This has a number of advantages: online returns don’t have to be filed until January 31, so you get three months longer to file; your tax is calculated automatically; you get an immediate online acknowledgement once you’ve filed; and it’s processed faster, so any money you’re owed is repaid more quickly.”

“However, if you are filing your tax return on paper, you’ll need to act now if you want to beat the deadline and get all the relevant information together, such as your P60 and savings records. Leave it too late, and you could end up with a £100 late-filing penalty.”

Microsoft are planning to launch a new “cloud” operating system late next year that will co-ordinate software inside the computer with software available on the internet. The world has changed and the market has moved on from desk top computing. Today the market uses all sorts of different types of internet-connected devices, such as smartphones and mini laptops, which in many cases use programs located on a server rather than on the device itself. Competitors of Microsoft already offer this type of computing and the question is ‘will Microsoft be able to maintain its advantageous market share as its software monopoly is eroded?’

Most businesses maintain a record of all transactions based on the double-entry bookkeeping system. However, many small, simple businesses maintain only a single-entry system that records the “bare-essentials”. In some cases only records of cash, accounts receivable, accounts payable and taxes paid are maintained. Records of assets, inventory, expenses, revenues and other elements usually considered essential in an accounting system are sometimes not kept, except in memorandum form. Single-entry systems are usually inadequate except where operations are especially simple and the volume of activity is low.

This type of accounting system with additional information can typically be compiled into an income statement and balance sheet by a professional accountant.

Advantages
Single-entry systems are used in the interest of simplicity. They are usually less expensive to maintain than double-entry systems because they do not require the services of a trained person.

1. Disadvantages
   Data may not be available to management for effectively planning and controlling the business.
2. Lack of systematic and precise bookkeeping may lead to inefficient administration and reduced control over the affairs of the business.
3. Single-entry records do not provide a check against clerical error, as does a double-entry system. This is one of the most serious defects of single-entry systems.
4. Single-entry records seldom make provision for recording all transactions. In addition, many internal transactions, such as adjusting entries are often not recorded.
5. Because no accounts are provided for many of the items appearing in both the Income Statement and Balance Sheet, omission of important data is possible.
6. In the absence of detailed records of all assets, lax administration of those assets may occur.
7. Theft and other losses are less likely to be detected.

Source: http://en.wikipedia.org/wiki/Single-entry_bookkeeping_system

Bookkeeping (also book-keeping or book keeping) is the recording of all financial transactions undertaken by an individual or organization (including a corporation or legal person). Bookkeeping is “keeping records of what is bought, sold, owed, and owned; what money comes in, what goes out, and what is left”. Bookkeeping is part of the accounting cycle, and bookkeepers’ work is closely related to that of accountants.

Individual and family bookkeeping involves keeping track of income and expenses in a cash account record, checking account register, or savings account passbook. Individuals who borrow or lend money track how much they owe to others or are owed from others.

Bookkeeping may be performed using paper and a pen or pencil but the vast majority of organizations use computer software.

Single / Double-entry
Two common bookkeeping methods used by businesses and other organizations are the single-entry bookkeeping system and the double-entry bookkeeping system. Single-entry bookkeeping uses only income and expense accounts, recorded primarily in a Revenue and Expense Journal. Single-entry bookkeeping is adequate for many small businesses. Double-entry bookkeeping requires posting (recording) each transaction twice, using debits and credits.

Bookkeeper
A bookkeeper (or book-keeper), sometimes called an accounting clerk in the United States, is a person who records the day-to-day financial transactions of an organization. A bookkeeper is usually responsible for writing up the “daybooks”. The daybooks consist of purchase, sales, receipts and payments. The bookkeeper is responsible for ensuring all transactions are recorded in the correct daybook, suppliers ledger, customer ledger and general ledger. The bookkeeper brings the books to the trial balance stage. An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
Source: http://en.wikipedia.org/wiki/Bookkeeping[digg-reddit-me]