Accounting

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Basic Bookkeeping for Your Small Business

Bookkeeping refers mainly to the record-keeping aspects of accounting. Bookkeeping is essentially the accounting process (some would say the drudgery) of recording all the information regarding the transactions [more…]

The Importance of Standardizing Business Source Documents

All business transactions require paperwork, called source documents. Business source documents, which are important to bookkeeping, need to be standardized. With standardized source documents, your bookkeeper [more…]

How to Hire the Right Accountant for Your Business

A business's bookkeeper or accountant should have the skills and knowledge that he or she needs to perform the required functions. If you're going to hire an accountant, you need to know what qualifications [more…]

Examining End-of-Period Bookkeeping Procedures

Even if all transactions during the year (or other business period) have been recorded correctly, the business's accounts still aren't quite ready for preparing the financial statements. Additional procedures [more…]

The Importance of a Bookkeeping Audit Trail

Good business bookkeeping systems leave good audit trails. An audit trail is a sequence of events leading up to a bookkeeping entry in your business's accounts. You start with the source documents and [more…]

Watching for Illegal Accounting Practices in Your Business

Fraud, embezzlement, and misappropriation can occur in every size of business. Such illegal accounting practices require manipulation of a business’s accounts. Keep your eyes open for these kinds of illegal [more…]

How to Choose the Right Accounting Software for Your Business

Accounting software packages are available for businesses of every size, from small home-based businesses to multinational corporations. Accounting software is a booming business, which means you have [more…]

How to Read an Income Statement

Some aspects of income statements may seem obvious, but other parts of income statements might leave you stumped. You need to identify the parts of an income statement and to know what they mean before [more…]

Examining Your Asset Accounts

The activities of a business involve inflows and outflows of cash, as you know. What you might not know, however, is that the profit-making process also involves four other basic operating assets, explained [more…]

Examining Your Business's Liability Accounts

The activities of a business involve inflows and outflows of cash, as you know. What you might not know, however, is that accountants use three different types of liability accounts to record a business's [more…]

Reasons to Report Extraordinary Gains and Losses on Your Income Statement

Many businesses report unusual, extraordinary gains and losses on their income statements. If your business has extraordinary gains and losses to report, your business's income statement is divided into [more…]

What You Put in a Business Balance Sheet

A balance sheet is the financial condition of your business at an instant in time. In your business balance sheet, you must put financial information that's in constant motion because the activities of [more…]

How to Read a Business Balance Sheet

When you read through your business's balance sheet, like the balance sheet shown in this figure, you may notice that it doesn’t have a "punch line" like the income statement does. You can’t look at just [more…]

The Differences between Internal and External Business Balance Sheets

Balance sheets, statements of a business's financial condition, are prepared for internal and external use. External balance sheets and internal balance sheets are intended for different audiences and [more…]

How to Judge Solvency on a Balance Sheet

Solvency refers to the ability of a business to pay its liabilities on time. Your business needs to remain solvent because delays in paying liabilities on time can cause you very serious problems. In extreme [more…]

Your Business's Intangible Assets Account

Many businesses invest in intangible assets — assets without physical existence, in contrast to buildings and computers, for example. Your business's intangible assets might include [more…]

How Assets and Liabilities Affect Your Business's Cash Flow

Your business's cash flow can be affected by asset and liability changes in your business. Changes in your assets and liabilities can affect cash flow in a way that signals serious problems: [more…]

Choosing an Accounting Method for the Cost of Goods Sold Expense

One main accounting decision companies that sell products must make is which method to use to record the cost of goods sold expense, which is the sum of the costs of the products sold to customers during [more…]

How to Read an Auditor's Report

Your business's financial statement audit report can give your business a clean bill of health, or the auditor's report may state that your financial statements are misleading and should not be relied [more…]

Setting a Budget for Your Business

Budgeting for a business requires you to set specific goals and develop a plan to achieve them. A business budget is an integrated plan of action for your business — not simply slap-dashing together a [more…]

How to Analyze Your Business's Profit

Analyzing your business's profit is not rocket science: Basically, you just need to determine how and why your business is (or isn't) making a profit. To figure out your business's profit history over [more…]

The Different Kinds of Business Costs

Business cost distinctions help you better appreciate the cost figures for the things that your business produces or sells. Correct product costs (for businesses that sell products, of course) are extremely [more…]

The Purpose of Financial Reporting

Financial reports are the documents and records you put together to track and review how much money your business is making (or not). The purpose of financial reporting is to deliver this information to [more…]

Including Adequate Disclosures in Your Financial Report

A financial report needs to include disclosures of important financial information about the business, as well as financial statements. The term disclosures [more…]

How to Decide Whether Your Business Needs an Audit

Audits provide the opportunity for a second set of eyes (usually those of a certified professional accountant) looking over your business’s accounts. An annual audit of your business may be a requirement [more…]

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