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Small Business Bookkeeping Transactions

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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…]

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…]

Notes Receivable Issued at Other Than Face Value

Your intermediate accounting textbook talks about three situations in which a company may issue a note receivable for other than face value: zero interest bearing, interest bearing, and notes for other [more…]

How to Dispose of Receivables

Instead of waiting for the customer or debtor to pay, a company may opt to “sell” a receivable to another company at a discount. Cash flow is a major factor in these sorts of instances. [more…]

Accounting Basics of Inventoried Goods

Three types of businesses operate: service, manufacturing, and merchandising. Breathe a sigh of relief, because you have to worry about only two (manufacturing and merchandising) here. Service businesses [more…]

How to Estimate Inventory with the Gross Profit Method

Regardless of the cost flow assumption or valuation method a company uses to record inventory on the balance sheet, the company must take a physical inventory. The regularity of this physical inventory [more…]

How to Handle Markups and Markdowns in Accounting

You may get quite a thrill when you’re out shopping and you see something fantastic on the discount rack. When you see it, you probably think, “Ching-ching, I just scored!” However, have you ever thought [more…]

How to Account for Self-Constructed Assets

A company doesn’t always buy an existing building in which to set up shop. Sometimes a company builds a factory or office building to its precise specifications and needs. Ditto for equipment. If the manufacturing [more…]

How to Defer a Payment When Valuing PP&E

If money doesn’t change hands when a company purchases property, plant, and equipment (PP&E), special issues can arise when valuing PP&E on the balance sheet. If a company signs a note for the asset purchase [more…]

How to Lump Purchases When Valuing PP&E

Adding intrigue to the mix when valuing property, plant, and equipment (PP&E), sometimes a company buys a bunch of different assets for a lump-sum price. A good example is a real estate transaction that [more…]

How to Exchange Assets When Valuing PP&E

Accounting for transactions that involve exchanging one tangible asset for another arises a lot when trading in an old business vehicle for a new one — an occurrence you’ve probably encountered in your [more…]

How to Record Repairs and Maintenance Expenses

Sad but true, costs related to property, plant, and equipment (PP&E) don’t stop at the purchase point. After getting plant assets up and running, repair and maintenance [more…]

How to Improve and Replace PP&E

Improving is the process of substituting a better asset for the one that’s already in place. Replacing means the company swaps out the old asset for another one that’s similar in nature. [more…]

How to Record Accrued Payroll and Taxes

It’s the nature of the beast that most companies will have accrued payroll and related payroll taxes. In other words, a company owes these taxes but has not yet paid them. This topic is easy to understand [more…]

How to Record Bonds Issued at a Premium

When a bond is issued at a premium, its market value is more than its face value. To make the concept come alive for you, consider a common example you will see in your intermediate accounting textbook [more…]

Treasury Stock Transactions

Treasury stock is shares of corporate stock that a company previously sold to investors and has since bought back. It may seem strange for a company to do this. After all, isn’t the point in selling stock [more…]

The Basics of Accounting for Leases

Businesses don’t always buy their fixed assets,which include property, plant, and equipment. Sometimes they lease those assets. You’ve probably been a party to a lease yourself at some time: Even if you [more…]

The Difference between Costs and Expenses

What’s a cost and what’s an expense? Consider an example. Assume that Penway Manufacturing, Inc., makes toasters and needs to buy some new metal fabrication machines to form the outer shell of the toaster [more…]

Depreciation Methods

Depreciation is the method of allocating costs to the appropriate period. Although accountants have to follow generally accepted accounting principles [more…]

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