Small Business Accounting

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Comparing Inventory Valuation Methods for a Business

The inventory valuation method you choose for your business — such as FIFO, LIFO, or Averaging — has an impact on your business’s profit margin. You can compare these methods to see what effect each method [more…]

Business Accounting: Buying and Monitoring Inventory Supplies

In addition to inventory, all businesses must buy supplies that are used to operate the business, such as paper, pens, and paper clips. Supplies that aren’t bought in direct relationship to the manufacturing [more…]

Getting Started with Accounting Software

After you choose the accounting software you want to use in your business, the hard work is done because actually setting up the accounting software will probably take you less time than researching your [more…]

Accounting: Examining Both Sides of Business Transactions

The accountant’s job is to capture all the transactions of the business, determine the financial effects of every transaction, record every transaction in the business’s accounts, and from the accounts [more…]

How to Develop Entries for the General Ledger

Because your business’s bookkeeping transactions are first entered into journals, you develop many of the entries for the General Ledger based on information pulled from the appropriate journal. [more…]

How to Post Entries to the General Ledger

After you summarize the journals for your business and develop the entries you need for the General Ledger, you post your entries into the General Ledger accounts. When posting to the General Ledger, include [more…]

Using the General Ledger in Computerized Accounting Software

If you keep your books by using a computerized accounting system, posting to the General Ledger is actually done behind the scenes by your accounting software. You can view your transactions right on the [more…]

Tracking Incoming Cash with the Cash Receipts Journal

The Cash Receipts journal is the first place you record incoming cash for your business. The majority of cash received each day comes from daily sales; other possible sources of cash include deposits of [more…]

Following Outgoing Cash with the Cash Disbursements Journal

The Cash Disbursements journal is the first place you record cash that goes out of the business and used to pay bills, salaries, rents, and other necessities. The Cash Disbursements journal is the point [more…]

Using a Sales Journal to Record Non-Cash Transactions

The Sales journal is where you initially record transactions for sales made by store credit (non-cash transactions). Each entry in the Sales journal must indicate the customer’s name, the invoice number [more…]

How Bookkeepers Track Purchases with the Purchases Journal

Purchases of products to be sold to customers at a later date are a key type of non-cash transaction, recorded in a business bookkeeper’s Purchases journal. All businesses must have something to sell, [more…]

Preparing a General Journal for Miscellaneous Transactions

Bookkeepers can prepare a general journal for miscellaneous transactions that don’t fit in one of the four main journals for a business (Cash Receipts, Cash Disbursements, Sales, and Purchases). If you [more…]

Bookkeeping: Posting Journal Information to the Appropriate Accounts

When bookkeepers close their books at the end of the month, they summarize all the journals — that is, they total the columns and post the information to update all the accounts involved. [more…]

Simplifying Journaling with Computerized Accounting

If you’re working with a computerized accounting software package, you enter a transaction only once, which greatly simplifies your bookkeeping journaling. All the detail that normally needs to be entered [more…]

Padding Profits by Manufacturing Too Many Products

Whenever production output for a business is higher than sales volume, be on guard. Excessive production can inflate the profit figure. Until a product is sold, the product cost goes in the inventory asset [more…]

Protecting Checking, Savings, and Petty Cash Business Accounts

Protect your business's checking, savings, and petty cash accounts. Cash used in a business is vulnerable; "dipping" into the checking, savings, and petty cash accounts can be tempting for some employees [more…]

How to Record Expenses and Losses for a Business

To make a profit, business managers have to control expenses. This task requires a good deal of information about how to record expenses and losses. How many expense accounts should a business maintain [more…]

Entering the Initial Inventory Costs for a Business

When your business first receives inventory, you enter the initial cost of that inventory into the bookkeeping system based on the shipment’s invoice. Invoices are sometimes sent separately, and only a [more…]

Controlling Inventory and Supplies Billing in Your Business

Eventually, you have to pay for both the inventory and the supplies you purchase for your business. These bills are typically posted to Accounts Payable when they arrive, and they’re paid when due. A large [more…]

Tracking and Recording Cash Sales in a Bookkeeping System

Most businesses collect cash as payment for the goods or services they sell. These cash sales must be tracked and recorded in a bookkeeping system. Cash receipts include more than just bills and coins; [more…]

How to Balance Cash Register Transactions

A business must balance cash register transactions at the end of each day to properly track and record sales transactions. This also helps to ensure that cashiers don’t pocket a business’s cash — cashiers [more…]

How to Maintain Employee Records

Keeping employee records accurate and up to date is essential for your business, especially when considering all the state and federal filing requirements for employee taxes. Otherwise, you’ll have a hard [more…]

Basic Types of Business Manufacturing Costs

Businesses that manufacture products have several additional cost factors to consider compared with retailers and distributors. These types of manufacturing costs include raw materials, direct labor, variable [more…]

How to Classify Product Costs for a Manufacturer

Two issues exist when businesses classify product costs for a manufacturer. They must distinguish between manufacturing and non-manufacturing operating costs, and determine how to allocate indirect costs [more…]

How to Calculate Product Costs for a Manufacturer

Businesses that manufacture products must determine how to calculate their product costs. Because most businesses produce multiple products, their accounting systems must be very complex and detailed to [more…]

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