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Adjustments to Net Income for Determining Cash Flow from Operating Activities
Debtors, stock and prepaid expenses are operating assetsused in the profit making process. Creditors and accrued expenses payable are operating liabilities [more…]
Defining Asset Depreciation for Businesses
Accountants use depreciation as a way to allocate the costs of a fixed asset over the period in which the asset is useable to the business. The bookkeeper records the full transaction when the asset is [more…]
Calculating the Useful Life of a Fixed Asset
Any asset that has a lifespan of more than a year is called a fixed asset. All businesses use equipment, furnishings, and vehicles that last more than a year. Although they may last longer than other assets [more…]
Exploring the Methods of Depreciating Assets
When calculating depreciation of your business assets each year, you have a choice of four methods: Straight-Line, Sum-of-Years-Digits, Double-Declining Balance, and Units of Production. After you decide [more…]
How to Use QuickBooks to Calculate Depreciation
When using QuickBooks for your accounting system, you don’t have to manually calculate depreciation expense amounts for your business. The Planning & Budgeting section of QuickBooks includes Decision Tools [more…]
Recording Long-Term Debt Transactions for Your Business
Most businesses borrow money for both long-term periods(periods of more than one year) and short-term periods(periods of one year or less). Long-term debt can include a 5-year car loan, 20-year mortgage [more…]
Closing Out the Cash Journals in Your Business
After business owners check the accuracy of their accounting books, they can finalize the cash journals and prepare financial reports to verify the company’s financial success or failure during the last [more…]
Credit Card Fees Your Business May Be Charged
When your business allows customers to use credit cards, you pay fees to the bank that processes these transactions, which is probably the same bank that handles all your business accounts. These fees [more…]
Reconciling Credit Card Statements for Your Business
If your business accepts credit cards as a payment option, you’ll need to reconcile credit card statements against the company’s books. Each month, the bank that handles the credit-card sales for your [more…]
Setting Up Depreciation Schedules for Your Business
In order to keep good accounting records, you must track how much you depreciate each of your business assets in some form of a schedule. After all, your financial statements only include a total value [more…]
The Positive Impact of Depreciation on Cash Flow
Depreciation has a positive impact on cash flow for a business. Fixed assets wear out and lose their economic usefulness over time. Some fixed assets last many years, such as office furniture and buildings [more…]
Types of Interest Available for Business Loans
Few businesses are able to make major purchases without taking out loans. Businesses must pay interest, a percentage of the amount loaned, to whoever loans them the money, whether loans are for vehicles [more…]
Nominal and Effective Interest Rates for Business Loans
Two interest rates used in business loans are the nominalinterest rate and the effective interest rate. The annual interest rate quoted by the bank is often called the nominal rate [more…]
Handling Interest Income for Your Business
The income that your business earns from its savings accounts, certificates of deposits, or other investment vehicles is called interest income. A bookkeeper is rarely required to calculate interest income [more…]
Recording Short-Term Debt Transactions for Your Business
Most businesses borrow money for both short-term periods (periods of one year or less) and long-term periods (periods of more than one year). Short-term debt usually involves some form of credit-card debt [more…]
Checking Out Computerized Journal Records for Your Business
Although you don’t have to close out journal pages if you keep your books using a computerized accounting system, running a spot check (at the very least) of what you have in your paper records versus [more…]
How to Summarize the Cash Receipts Journal
You can summarize the Cash Receipts journal for your business once you’re sure that all cash receipts — as well as any corrections or adjustments to those receipts — have been properly entered in the accounting [more…]
Closing the Cash Disbursements Journal for Your Business
After you close the Cash Receipts journal for your business, the next step is to close the Cash Disbursements journal. Any adjustments related to outgoing cash receipts, such as bank credit-card fees, [more…]
Using a Temporary Posting Journal in Your Business
Some businesses use a Temporary Posting journal to record payments that are made without knowing how the cash outlay should be posted to the books and which accounts will be impacted. For example, a company [more…]
Reconciling Bank Accounts for Your Business
The process of reconciling the bank accounts for your business refers to proving out cash — verifying that what you have in your business’s bank accounts actually matches what the bank thinks you have [more…]
Tracking Down Bank Account Errors for Your Business
Periodically, you need to reconcile your business’s bank accounts against statements provided by the bank. Ideally, your balance and the bank’s balance adjusted by transactions not yet shown on the statement [more…]
Reconciling Business Bank Accounts with a Computerized System
If you use a computerized accounting system such as QuickBooks in your business, reconciling bank accounts should be much easier than if you were keeping your books manually. When you start the reconciliation [more…]
Preparing to Close Out a Business’s Journals
As you prepare to close your business’s books at the end of an accounting period, you first need to summarize (total) the journals. During the process, it’s a good idea to look for blatant errors and be [more…]
Planning for Cash Flow in Your Business
The process you go through each month as you prepare to close the accounting books for your business helps you plan for future cash flow. Reviewing the Accounts Receivable and Accounts Payable Aging Summaries [more…]
Posting Adjustment Entries to the General Ledger
An important part of closing the accounting books for your business is posting to the General Ledger any corrections or adjustment entries you find as you close the journals. This type of posting consists [more…]
