If you do end up with big shortages or overstock issues, address adjustments and valuations with your accountant to be sure they’re recorded correctly for tax purposes. Then, see if you can identify the problem—such as poor receiving practices, theft, or inaccurate purchases due to bad stock counts—and put the procedures covered here in place to prevent them in the future. Check each delivery against (more…) […]
It is calculated over a period of time and assesses the change in stock price against the net earnings retained by the company. Retained earnings are the portion of a company’s cumulative profit that is held or retained and saved for future use. Retained earnings could be used for funding an expansion or paying dividends to shareholders at a later date. Retained earnings are related to net income because it’s the net income amount saved by a company over time. (more…) […]
For assessing materiality of an item, accountants not only take into account the individual amounts but also the cumulative effect of all immaterial amounts. For example, each of fifteen items may be immaterial when considered by itself. However, the combined effect of fifteen items may be material when seen together. Practically speaking, an auditor can’t test every transaction, but he or she will conduct more extensive testing in areas that present a greater risk of material misstatemen […]
In the next column, list each account affected by the transaction on a separate line, and enter a short description of the transaction immediately below the list of accounts. The accounts being debited always appear above the accounts being credited, which are indented slightly. The posting reference column remains blank until the journal entry is transferred to the accounts, a process called posting, at which time the account’s number (more…) […]
You can create your own personal financial statements to help with budget planning and to set goals for increasing your net worth. Paid-in-Capital – for this, we use last years’ closing balance of paid-in-capital, as well as cash budget. Peggy James is a CPA with over 9 years of experience in accounting and finance, including corporate, nonprofit, and personal finance environments.Ending Retained Earnings is $1,135,000 ($400,000 + 855,000 – 120,000).Remember that the financial budget is a […]
This means that failing to spend 75% of the loan amount on payroll costs will reduce the amount of forgiveness but not render the borrower ineligible for forgiveness. Additionally, the amount of forgiveness is based on the amount the borrower spends on payroll, and not on the total amount borrowed or spent. The Small Business Administration has released two new interim final rules providing additional guidance with respect to loan forgiveness and audits of loans under the Paycheck Protection Pr […]
Certain cost accounting formulas should be monitored on a regular basis in order to spot spikes or drops in the performance of an organization. These issues can then be investigated to see if remedial action should be taken, with the intent of enhancing profits. The most important cost accounting formulas are noted below. Find your business’s profit margin to determine the percentage of revenue you keep after taking care of expenses. The accounting equation shows you how much of your asse […]
Sometimes a high dividend yield is the result of a stock’s price tanking. A high or low yield depends on factors such as the industry and the business life cycle of the company. For example, it may be in the best interest of a fast-growing company to not pay any dividends.
The dividend yield or dividend–price ratio of a share is the dividend per share, divided by the price per share. It is also a company’s total annual dividend payments divided by its market capitalization, assumin […]
Because even the most thorough bookkeeper can make mistakes, a bookkeeper usually works under the direction of an accountant unless the business is very small. If you want to avoid running out of money suddenly, you need to keep an eye on your cash flow. It helps to have someone else checking the numbers here, making sure your cash keeps flowing. As noted in our guide abouthiring an accountant, you should use an accountant to help you set up your business.
Days sales outstanding is a measure which should be monitored often in order to gauge the efficiency and effectiveness of a company’s accounting department. Closely examine the trend in DSO over a period of weeks or months to identify problems. One way to monitor trends in days sales outstanding is through the use of a flash report. For example, a company may also consider implementing a daily cash report to manage its cash on a daily basis, with an eye towards improving its DSO by improv […]
