Small Business Accounting

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Accounting Basics: Reporting Cash Flows and Profit and Loss

When examining the financial statements for a business, the statement of cash flows and the income statement (also called the profit and loss statement) differ from the balance sheet in one important respect [more…]

Comparing Bookkeeping with Related Accounting Functions

Business managers must ensure that their company’s bookkeeping and accounting system is adequate and reliable. The steps in the bookkeeping cycle have corresponding accounting functions. It’s important [more…]

How Accounting Focuses on Transactions

Business accounting focuses on transactions. A good bookkeeping system unfailingly captures and records every transaction that takes place. Understanding accounting, to a large extent, means understanding [more…]

The Eight Steps of the Accounting Cycle

As a bookkeeper, you complete your work by completing the tasks of the accounting cycle. It’s called a cycle because the accounting workflow is circular: entering transactions, manipulating the transactions [more…]

Knowing Your Debits from Your Credits

Accountants and bookkeepers record transactions as debits and credits while keeping the accounting equation constantly in balance. This process is called [more…]

Examining a Balance Sheet Model for a Business

The balance sheet is one of the primary financial statements prepared for businesses. Examining a balance sheet model for a fictional company can help you to understand the content and structure of a typical [more…]

How to Set Up a Chart of Accounts for Bookkeeping

There’s no secret to knowing how to set up a Chart of Accounts for your business — just make a list of the accounts that apply to your business. Don’t panic if you can’t think of every type of account [more…]

Using Income Statements in Accounting

The income statement, also known as a profit and loss statement, summarizes a firm's revenues and expenses for a particular period of time. Revenues represent amounts that a business earns by providing [more…]

Using Balance Sheets in Accounting

The balance sheet is the second-most-important financial statement that an accounting system produces, after an income statement. A balance sheet reports on a business's assets, liabilities, and owner [more…]

Understanding the Basic Principles of Accounting

Accounting rests on a rather small set of fundamental assumptions and principles. People often refer to these fundamentals as generally accepted accounting principles [more…]

Key Financial Accounting Terms and Definitions

In a financial accounting class, and on the job as an accountant, you need to know some jargon. Following is a glossary of words and phrases crucial to the accounting profession. [more…]

Accounting Details in Different Kinds of Financial Statements

The three key financial statements are the income statement, balance sheet, and statement of cash flows. All three record the same daily accounting transactions occurring in a business, but each presents [more…]

Financial Accounting For Dummies Cheat Sheet

Financial accounting is the process of preparing financial statements for a business. The three key financial statements are the income statement, balance sheet, and statement of cash flows, and they serve [more…]

Deciding Whether Your Business Should Offer Store Credit

Many businesses decide to sell to customers on direct credit (or store credit), meaning credit offered by the business and not through a bank or credit card provider. This approach offers more flexibility [more…]

Mind the GAAP: U.S. Accounting and Financial Reporting Standards

In the United States, business accountants must follow specific rules — called Generally Accepted Accounting Principles (GAAP) — when reporting business financials. The Generally Accepted Accounting Principles [more…]

Looking at International Accounting and Reporting Standards

The International Accounting Standards Board, or IASB, based in London, is the main authoritative accounting standards setter outside the United States. [more…]

Accounting and Reporting by Government and Not-For-Profit Entities

Accounting and financial reporting standards have evolved and been established for U.S. government and not-for-profit entities. Financial reporting by government and not-for-profit entities is a broad [more…]

Classifications of Business Transactions

In understanding accounting, you need to be very clear about which classification of business transaction you’re looking at. Businesses are profit-motivated, so one basic type of transaction is obvious [more…]

The Three Types of Sales Transactions

The effect that making a sale has on a business’s financial condition depends on the type of sales transaction that's made — that is, when the cash is collected from the sale When a business sells a product [more…]

Keeping the Accounting Equation in Balance

The accounting equation used in business must always be kept in balance — the assets on one side of the equation must equal the claims against the assets on the other side: [more…]

How to Adjust for General Ledger Errors

The bookkeeping entries that you make in a General Ledger aren’t cast in stone. If necessary, you can always change or correct any errors with what’s called an adjusting entry. [more…]

Recording Investing and Financing Transactions for a Business

Though few in number, investing and financing transactions for a business are important and usually involve big chunks of money. The investing and financing transactions are reported in the statement of [more…]

How to Choose the Right Bank for Your Business

Finding the right bank for your business, to help you set up your checking account and the controls that limit access to that account, is crucial. When evaluating your banking options, ask yourself the [more…]

Controlling Cash Register Transactions in Your Business

It’s important for businesses to carefully monitor the money in their cash registers and to maintain proper control of all cash register transactions. Have you ever gone into a business and tried to pay [more…]

Maintaining Proper Paperwork for a Business’s Cash Transactions

When it comes to handling cash transactions in your business, a lot of paperwork changes hands. In order to properly control the movement of cash into and out of your business, careful documentation is [more…]

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