Small Business Accounting

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Finding Market Equilibrium Price and Quantity

Buyers and sellers interact in markets. Market equilibrium occurs when the desires of buyers and sellers align exactly so that neither group has reason to change its behavior. The market equilibrium price [more…]

Identifying Market Failures

Sometimes markets fail to generate the socially optimal output level of goods and services. Several prerequisites must be fulfilled before perfect competition can work properly and generate that output [more…]

How to Calculate Payroll for Employees at Your Business

When you know the details about your employees’ withholding allowances and their benefit costs, you can then calculate the final payroll for your business and post it to the books. [more…]

Bookkeeping: How to Track Sales Discounts

When your business offers discounts to customers, a good bookkeeping tactic is to track the sales discounts in a separate account so you can keep an eye on how much you discount sales in each month. [more…]

Recording Sales Returns and Allowances for Your Business

Bookkeeping can become pretty confusing if you incorrectly record sales returns, gift card sales, and returns bought with a discount. Most stores deal with sales returns and sales allowances [more…]

Monitoring Accounts Receivable and Recording Business Losses

It’s important for businesses to closely monitor Accounts Receivable to minimize the recording of business losses. One of the bookkeeper's crucial responsibilities is to make sure customers pay their bills [more…]

Deciding How Frequently to Pay Your Business’s Employees

Deciding how frequently you’ll pay employees is an important point to work out before hiring staff. Most businesses choose one or more of these pay periods: [more…]

Determining Net Pay for Employees in Your Business

Net pay is the amount a person is paid after subtracting taxes and benefits. So, after all deductions are subtracted from an employee’s gross pay, you are left with the net pay. After you figure out all [more…]

Cafeteria Benefits Plans: Offering Choices to Employees

Cafeteria plans are benefit plans that offer employees a choice of benefits based on cost. Employees can pick and choose from those benefits and put together a benefit package that works best for them [more…]

Classes of Stock Shares in a Business

Before you invest in stock shares, you should ascertain whether the corporation has issued just one class of stock shares. A class is one group, or type, of stock shares all having identical rights; every [more…]

Why Accounting Systems Need Strong Internal Controls

Any accounting system should establish and vigorously enforce effective internal controls — basically, additional forms and procedures over and above what’s needed strictly to move operations along. [more…]

Accounting Controls That Guard Against Mistakes and Theft

Accounting is characterized by a lot of paperwork — forms and procedures are plentiful. Internal accounting controls that guard against mistakes and theft are also essential business tools. Most business [more…]

Leaving Good Audit Trails in a Bookkeeping System

Good bookkeeping systems leave good audit trails. An audit trail is a clear-cut path of the sequence of events leading up to an entry in the accounts. An accountant starts with the source documents and [more…]

What You Should Know about Financing a Business

To run a business, you need financial backing, otherwise known as capital. A business raises capital by buying things on credit, waiting to pay some expenses, borrowing money, getting owners to invest [more…]

Financial Leverage: Taking a Chance on Business Debt

A majority of businesses use financial leverage to borrow money, providing part of the total capital needed for their assets. The main reason for debt is to close the gap between how much capital the owners [more…]

Studying the Sources of Business Capital

Every business needs sources of capital (financial backing), because it's capital that provides the money for the assets a business needs to carry on its operations. Common examples of business assets [more…]

Legal Definitions of Business Entities

An important aspect of the U.S. legal system — from a business and economic standpoint — is that the law enables entities to be created for conducting business activities. These entities are separate and [more…]

Raising Equity in a Corporation by Issuing Stock Shares

When raising equity capital, a corporation issues stock ownership shares to persons who invest money in the business. These ownership shares are documented by stock certificates, which state the name of [more…]

Financial Formulas

Formulas are an important part of business. A formula qualifies as such when it consistently gives you correct results and answers to questions thus providing organization and structure. The most common [more…]

Common Business and Financial Acronyms

The business world is packed with terms and acronyms. Take a look through the following list, learn the terms, and you’ll be speaking like a financial pro in no time. [more…]

Primary Reasons for Budgeting in a Business

Budgeting demands a fair amount of managers’ time and energy. So why should a business go through the time and effort of budgeting? Business managers budget and prepare budgeted financial statements for [more…]

Determining the Market Value of Stock Shares

If you want to sell stock shares, how much can you get for them? How do you determine the market value of the stock shares? There’s a world of difference between owning shares of a public corporation and [more…]

Watching for the Dilution of Stock Share Values

Watch out for developments that cause a dilution effect on the value of your stock shares — that is, that cause each stock share to drop in value. Sometimes the dilution effect may be the result of a good [more…]

Looking at Management Stock Options

Many publicly owned corporations grant their top-level executives management stock options in addition to their salaries and other compensation benefits. Management stock options are a prime example of [more…]

Recognizing Conflicts between Stockholders and Managers

While stockholders and business managers are primarily concerned with the profit performance of the business in which they are shareholders, they have inherent conflict of interests. [more…]

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