Trifold Bookkeeper Advisors

The team at Trifold would like to wish you a safe and fun Victoria Day weekend!

FUN FACT: Statutory Deductions - EI (post #1 of 3)
Did you know that payroll Statutory deductions in Canada did not all begin at the same time?
Started in 1940 and originally called “Unemployment Insurance”, it was prompted by the Great Depression when approximately 30% of the labour force was without work. The program received Royal Assent in 1941 following a constitutional amendment giving the federal government power over unemployment programs. It was renamed Employment Insurance in 1996 at which time the program tightened who could qualify. It is overseen by the Canada Employment Insurance Commission, and research shows that it has been an important economic stabilizer in the past three recessions.

FUN FACT: Footing and Cross-Footing
These techniques used to verify the accuracy of numerical data began historically as “pencil footing” which meant making small pencil notes at the bottom of ledger columns to calculate sums before writing the final totals in ink. This evolved to FOOTING (totaling column numbers vertically) and CROSS-FOOTING – or cross-verifying (adding those column totals in a row horizontally) to prove that totaling the columns and the cross-footed row result in the same grand total. This procedure is critical for audit testing of mathematical accuracy in financial spreadsheets and schedules. In today’s world, software does this instantly, but the principle for audit accuracy remains the same.

FUN FACT: the word "Invoice"
According to Google, this word is derived from the Middle French language meaning “a sending” or “things sent” and entered English in the 1550s to note a written account of merchandise particulars and prices sent or shipped. Then in the 1690s the Oxford English Dictionary noted this word as a verb used to describe the act of sending a bill. The format of the invoice became more formalized in the late 18th century because of the Industrial Revolution and the need to manage more complex shipping and manufacturing transactions along with the need to include more detailed buyer and seller information.

FUN FACT: the word "Estimate"
The word ‘estimate’ comes from the Latin word ‘aestimatus’ which means “to value, determine the value of, or appraise”. Entering the English language in the early 16th century, it was originally used as a verb and then also became a noun shortly thereafter. It then evolved to mean a formal, written statement of anticipated costs, and the first recorded business use was in 1796.

FUN FACT: Cash-Basis Accounting
Cash-basis bookkeeping is restricted in Canada by the CRA. Generally, those restrictions don’t apply to farmers, fishers, and certain small businesses with specific revenue profiles, and even then there are specific rules that apply when using the cash-basis method at year-end filings. It’s a good thing there’s a specific CRA guide for this, which is publication “Self-employed Business, Professional, Commission, Farming and Fishing Income.”

FUN FACT: the Income Statement
In Canada, the history of the Income Statement comes from the evolution of taxation and financial reporting standards. In 1916-1917, a World War I measure (the Income War Tax Act) mandated the reporting of corporate profits and personal income, marking the beginning of standardized income tracking. Since then, alterations to reporting income (such as the inclusion of capital gains), the adoption of GAAP principles in 1975, and IFRS standards in 2011, it is now a standardized financial statement showing a company’s revenues and expenses during a particular period. Also known as a Profit and Loss Statement, the calculation of this report is Total Revenue – Total Expenses = Net Profit/Loss.

FUN FACT: the Balance Sheet
Based on the double-entry bookkeeping created by Luca Pacioli, the Balance Sheet was originally a private, simple list used by merchants to track their wealth because it sorted their assets from their liabilities. Then, over time, modern accounting standards formalized it into more detailed reporting for owners and investors. The Balance Sheet is the only standardized financial statement that reports a snapshot at a single point in time of a company’s financial position. Also known as a Statement of Financial Position of a Statement of Financial Condition, the calculation of this report is Total Assets = Total Liabilities + Total Equity.

FUN FACT: the word "Bookkeeper"
The origin of the word ‘bookkeeper’ is a bit obscure, but it is a compound word of ‘book’ and ‘keeper’. ‘Book’ is derived from the Old English ‘boc’ which originally meant a written record, and ‘keeper’ is from the Old English ‘cepan’ (means to keep or observe) which referred to someone who is in charge of something. According to Google, the term bookkeeper first appeared in the 1550s, describing an occupation that made formal records of transactions. Then in the 1680s ‘bookkeeping’ was recorded as “the work of keeping account books”. It is one of the only English words with three consecutive double letters ( ‘oo’, ‘kk’, and ‘ee’).

FUN FACT: “Shoebox” accounting
A familiar term to bookkeepers and accountants, shoebox accounting refers to an informal method of record-keeping where a business owner or individual saves their invoices, receipts, and other financial documents in an actual ‘box’. The size of this box was often similar to a shoebox, where the documents were kept without any form of organization or categorization. This container of disorganized goodies is then handed off to the bookkeeper or accountant to sort, organize, and enter into an accounting system so that tax returns can be prepared. If there’s an upside, it’s that technology can now be used to scan and upload those documents into a ‘digital shoebox’, making them more accessible to users.