Business Operations

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Preparing Management Control Reports for Business Managers

The trick in preparing management control reports for business managers is to separate the wheat from the chaff. Being very busy people, business managers can’t afford to waste time on relatively insignificant [more…]

Developing Models for Management Decision-Making Analysis

To aid in their decision-making analysis, business managers need for accountants to develop a model of operating profit for their business that, theoretically, fits on the back of an envelope. [more…]

Protecting Your Business from Theft and Fraud

Every business owner faces the possibility of theft or fraud. Too often, business owners find out about an employee pocketing some assets when it’s too late to do anything about it. Even the most loyal [more…]

Monitoring Collections from Your Business’s Customers

Whenever your business sells to customers on credit, you will need to monitor how quickly your customers are paying their bills. You also need to keep track of customers who aren’t paying on time. As you [more…]

How to Hire Competent, Trained Accounting Personnel

Bookkeepers and accountants, like all other employees in a business, should have the skills and knowledge needed to perform their functions. You shouldn’t try to save a few bucks by hiring the lowest-paid [more…]

How Land Is Defined in Accounting Terms

Land, also called real property, is the earth on which the company’s office buildings or manufacturing facilities sit. The cost of the land plus any improvements the company has to make to the land to [more…]

Dispositions of Plant Assets

In the normal course of doing business, a company rids itself of unneeded fixed assets. Different ways they may do this include selling the asset, trading it in on a new fixed asset, junking it, or doing [more…]

Inventory Carrying Valuation Methods

You may be thinking that valuing ending inventory is a no-brainer — you just value inventory at whatever the original cost happened to be for whatever is left in inventory at the end of the financial period [more…]

Buildings as Part of Property, Plant, and Equipment

This category of Property, Plant, and Equipment (PP&E) includes the company-owned structures in which the company conducts business operations. It includes office buildings, manufacturing facilities, and [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 Issue Stock When Valuing PP&E

If a company swaps stock for property, plant, and equipment (PP&E), you can’t just use the par value(arbitrary value listing on the face of the stock certificate) of the stock as the cash-equivalent exchange [more…]

How to Write Off Intangibles with Amortization

Amortization mimics depreciation because you use it to move the cost of intangible assets from the balance sheet to the income statement. Most intangibles are amortized on a straight-line basis using their [more…]

How to Impair Intangible Assets

An impairment loss takes place when a company makes a judgment call that the carrying value of an intangible asset on the company balance sheet is less than [more…]

The Costs of Research and Development (R&D)

For accounting, research expenses are ones the company incurs in the discovery of new knowledge, with the hope that such knowledge will be useful in developing a new product or service. Businesses incur [more…]

Permanent Differences in Tax Accounting

A temporary difference eventually smoothes itself out over time, but permanent differences won’t ever be the same in terms of book versus tax. A permanent difference [more…]

How to Identify Intangible Assets

You’re probably somewhat familiar with intangibles from other accounting classes you’ve taken. However, your intermediate accounting textbook takes a slightly difference approach to the discussion by dividing [more…]

Point-of-Sale/Delivery Revenue

Point-of-sale/delivery is just another way of saying that the company records revenue when it’s earned and realizable. Here are two examples of this: one involving a retail store and the other taking place [more…]

The Percentage-of-Completion Method for Contracts

Use the percentage-of-completion method when you record revenue from long-term contracts in stages. With this method, you recognize revenue, costs, and gross profits throughout the life of each contract [more…]

The Completed-Contract Method for Contracts

The completed-contract method (CCM) is easier to account for than the percentage-of-completion method (PCM). Using the CCM, a contracting company doesn’t recognize either revenue or expense transactions [more…]

The Installment Method of Revenue Recognition

Installment sales take place whenever purchases are made but not fully paid for at point of sale or delivery. For example, Penway, Inc., wants to totally revamp the office with swanky new furniture and [more…]

The Cost-Recovery Method of Revenue Recognition

The installment-sale method isn’t exactly an optimal way of recording sales transactions, and the cost-recovery method takes it down another notch. If a company isn’t reasonably assured of recovering the [more…]

Corporate Finance: Calculating Assets

Everything that makes up a corporation and everything a corporation owns, including the building, equipment, office supplies, brand value, research, land, trademarks, and everything else, are considered [more…]

Understanding How Behavior Affects Corporate Finance

Behavioral finance was developed as the result of the need to explain how corporations and the people within them behave, driving an overlap between the fields of finance and psychology. Very broadly speaking [more…]

Cost-Volume-Profit Relationships for Managerial Accounting

Managerial accounting provides useful tools, such as cost-volume-profit relationships, to aid decision-making. Cost-volume-profit analysis helps you understand different ways to meet your company’s net [more…]

Key Costs Related to Managerial Accounting

In accounting, a cost measures how much you pay/sacrifice for something. Managerial accounting must give managers accurate cost information relevant to their management decisions. Here are several cost-related [more…]


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