Bookkeeping 101

A credit is a notation made on the “right” side of an account that is the opposite of a debit. It decreases the value of an asset or expense, but increases the value of liabilities, revenues and equity accounts. Prepaid rent is considered an expendit…

The next line is money the company doesn’t expect to collect on certain sales. This could be due, for example, to sales discounts or merchandise returns. Finally, the balance sheet can not reflect those assets which cannot be expressed in monetary te…

This article is for small business owners who want to learn what liabilities are and see examples of common business liabilities. When applying the formula of the ratio of fixed assets to long-term liabilities, the fixed assets of $510,000 must be di…

She most recently worked at Duke University and is the owner of Peggy James, CPA, PLLC, serving small businesses, nonprofits, solopreneurs, freelancers, and individuals. Our priority at The Blueprint is helping businesses find the best solutions to i…

Amortization is typically expensed on a straight-line basis, meaning the same amount is expensed in each period over the asset’s useful lifecycle. Assets expensed using the amortization method usually don’t have any resale or salvage value, unlike wi…

4Note that taxpayers can now use the cash method of accounting for federal income tax purposes if their average annual gross receipts for the prior three years do not exceed $25 million. Also, such taxpayers can treat inventory as nonincidental mater…

Due to the simple nature of accounting cash basis is often used by small businesses to prepare their books of accounts. When you note accrued revenue, you’re recognizing the amount of income that’s due to be paid but has not yet been paid to you. For…

It’s tough to track down receipts and invoices when you have crews all over the place and it’s impossible to do job costing without them. You can’t run a successful business without knowing your exact costs. ClockShark helps you track job-related tim…

A key control is an action your department takes to detect errors or fraud in its financial statements. … To fulfill documentation requirements, departments should review those activities and identify key controls….

The degree of financial leverage (DFL) is a leverage ratio that measures the sensitivity of a company’s earnings per share to fluctuations in its operating income, as a result of changes in its capital structure. This ratio indicates that the higher …