Bookkeeping

All revenues received or all expenses paid in advance cannot be reported on the income statement for the current accounting period. They must be assigned to the relevant accounting periods and reported on the relevant income statements. Adjusting entries are accounting journal entries that convert a company’s accounting records to the accrual basis of accounting. […]

If this process is not handled correctly you run the risk of overstating income. As an example if you create the invoice and then deposit a check directly into the bank register without receiving the payment against the invoice you will overstate income. The reason is you have recorded the income when you created the invoice.

What is a more telling indicator of a company’s short-term liquidity is an increasing or decreasing trend in their net WC. change in net working capital formula A company with a negative net WC that has continual improvement year over year could be viewed as a more stable business than one with a positive net

It’s important to list your credentials in the profile or “about” sections on these social media accounts so that prospective clients can easily see your skills and experience. Though there’s a high demand for bookkeepers, you’ll have to attract and impress clients to thrive as a freelancer. Read through this guide to learn how to

He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University. The number of closing activities may be quite substantially longer than

When you compare the balance of your cash book with the balance showcased by your bank passbook, there is often a difference. One of the primary reasons this happens is due to the time delay in recording the transactions of either payments or receipts. The purpose of preparing a bank reconciliation statement is to reconcile

Yes, it means there is more money left over after paying variable costs for paying fixed costs and eventually contributing to profits. It means there’s more money for covering fixed costs and contributing to profit. Break even point (BEP) refers to the activity level at which total revenue equals total cost. Contribution margin is the

Each account within the COA is typically assigned a unique identifier, usually a numerical code (see examples below), to facilitate data entry and reporting. A chart of accounts (COA) is an index of all of the restaurant inventory guide for dummies financial accounts in a company’s general ledger. In short, it is an organizational tool that lists

Profitability ratios like gross how is the balance sheet prepared from trial balance profit margin and net profit margin show how much profit your business is making. Liquidity ratios like current ratio and quick ratio show your business’s ability to pay off its short-term debts. Efficiency ratios like inventory turnover ratio and accounts receivable turnover

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