Bookkeeping

It can include things like interest earned on money in the company’s bank account. Although they sound similar, unearned income and unearned revenue aren’t the same thing. It’s important to distinguish between them, since they’re treated very differently for accounting purposes. For example, getting bonds payable paid upfront means you don’t need to chase up […]

This approach helps in combating tax avoidance strategies that may rely on the legal form of transactions to reduce taxable income or to gain preferential tax treatment. In practice, some preparers of financial statement are engaged in manipulations of accounting figures so as to exploit choices available, within existing accounting regulations and generally accepted accounting […]

Positive cash flow indicates that a company’s financial liquidity is increasing. On the other hand negative cash flows are indicators of a company’s declining liquid assets. Now, we have to evaluate the cash flow to creditors for the company during the fiscal year to assess its debt management. As a result, creditors typically view positive […]

Contributed Capital has been a fundamental concept in accounting and finance, tracing back to the earliest days of corporate business operations. It reflects the investors’ confidence and commitment to a company’s potential and growth. Recording contributed capital in an organization’s financials is a straightforward process, encapsulated by journal entries that reflect the exchange of capital […]

It summarizes all the transactions from every account that were posted throughout the year. Since most companies have many different accounts, their general ledgers can be extremely long. The purpose of journalizing is to record the change in the accounting equation caused by a business event. Ledger accounts categorize these changes or debits and credits into specific accounts, so […]

By analyzing the contribution margin for different offerings, businesses can identify the most profitable products or services and allocate resources accordingly. For instance, if the contribution margin of a particular product is relatively low, the business may decide to discontinue that product or optimize it to increase profitability. Overall, contribution margin enables businesses to make […]

The number of outstanding shares, including those held by insiders and institutional investors, is the denominator in the book value per share calculation. This figure, often found in a company’s latest filings with the SEC, should be up-to-date. Analysts must differentiate between basic and diluted shares, as stock options, warrants, or convertible securities can increase […]

The mechanics of declining balance depreciation represent a nuanced approach to asset valuation that allows for a more accelerated depreciation schedule compared to traditional methods. This method is particularly advantageous for assets that experience rapid obsolescence or technological advancements, as it aligns the depreciation expense with the diminishing utility of the asset over time. By […]

Schwartz became sole president of Bear after Spector was ousted, and several months later assumed the position of CEO as well when James Cayne was forced to resign (Cayne remained chairman). However, a company can’t just magically make more money, reach new customers, or grow a team overnight. It takes intention and strategy from an […]

Cash is increased with a debit, and the credit decreases accounts receivable. The balance sheet formula remains in balance because assets are increased and decreased by the same dollar amount. This entry increases inventory (an asset account), and increases accounts payable (a liability account). Implementing accounting software can help ensure that each journal entry you […]