http://info5000.com//ACCOUNTING/index.html If everyone involved in the process of accounting followed their own system, or no system at all, there's be no way to truly tell whether a company was profitable or not. Most companies follow what are called generally accepted accounting principles, or GAAP, and there are huge tomes in libraries and bookstores devoted to just this one topic. Unless a company states otherwise, anyone reading a financial statement can make the assumption that company has used GAAP. en-us Thu, 2 Sep 2010 14:31:52 PDT Los Angeles - Universal Business Computing Company (www.ubcc.com), the leading provider of high volume, high productivity payroll and accounting software, today announces auto-fill and auto-populate features have been added to their general ledger and bank reconciliation data entry screens. http://info5000.com/ACCOUNTING/index.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT FA IRBANKS The former district accounting supervisor at the Fairbanks courthouse has been accused of embezzling 237,000 worth of bail money from the court system. The office of special prosecuti... http://info5000.com/ACCOUNTING/index.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT The UNC Accounting Club will host an informational meeting to introduce new students to its officers and discuss fall events. The meeting will be held in the Kenan-Flagler Business School. http://info5000.com/ACCOUNTING/index.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT With Representative Payee product, AccuFund Accounting Suite v4.01 enables users to generate banking transactions, make deposits from multiple client accounts at same time, hold deposited funds until checks have cleared, and add demographics to client profiles. Purchasing module lets users make blanket purchase orders and indicate or change vendor to be paid at point of invoice entry. With Web ... http://info5000.com/ACCOUNTING/index.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Ugh, budgeting is one of those topics we'd rather avoid, but in business, it's an absolute necessity. To prepare a reasoned and thoughtful budget, an accountant must start with a broad-based critical analysis of the most recent actual performance and position of the business by the managers who are responsible for the results. Then the managers decide on specific and concrete goals for the coming year. It demands a fair amount of management time and energy. Budgets should be worth this time and effort. It's one of the key components of a manager's job. http://info5000.com/ACCOUNTING/budgeting.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Another portion of the statement of cash flows reports the investment that the company took during the reporting year. New investments are signs of growing or upgrading the production and distribution facilities and capacity of the business. Disposing of long-term assets or divesting itself of a major part of its business can be good or bad news, depending on what's driving those activities. A business generally disposes of some of its fixed assets every year because they reached the end of their useful lives and will not be used any longer. These fixed assets are disposed of or sold or traded in on new fixed assets. The value of a fixed asset at the end of its useful life is called its salvage value. The proceeds from selling fixed assets are reported as a source of cash in the investing activities section of the statement of cash flows. Usually these are very small amounts. http://info5000.com/ACCOUNTING/investing-and-financing.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT While some lines of an income statement depend on estimates or forecasts, the interest expense line is a basic equation. When accounting for income tax expense, however, a business can use different accounting methods for some of its expenses than it uses for calculating its taxable income. The hypothetical amount of taxable income, if the accounting methods used were used in the tax return is calculated. Then the income tax based on this hypothetical taxable income is fitured. This is the income tax expense reported in the income statement. This amount is reconciled with the actual amount of income tax owed based on the accounting methods used for income tax purposes. A reconciliation of the two different income tax amounts is then provided in a footnote on the income statement. http://info5000.com/ACCOUNTING/parts-of-income-statement,-part-3.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Accounting has become more and more complex as have the businesses that use accounting functions. Fortunately, there are several excellent software packages that can help you manage this important function. Quasar is one such package. http://info5000.com/ACCOUNTING/quasar-software.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT If you have a checking account, of course you balance it periodically to account for any differences between what's in your statement and what you wrote down for checks and deposits. Many people do it once a month when their statement is mailed to them, but with the advent of online banking, you can do it daily if you're the sort whose banking tends to get away from them. http://info5000.com/ACCOUNTING/personal-accounting.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Some business owners choose to create partnerships or limited liability companies instead of a corporation. A partnership can also be called a firm, and refers to an association of a group of individuals working together in a business or professional practice. http://info5000.com/ACCOUNTING/what-are-partnerships-and-limited-liability-companies.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT It might seem obvious, but in managing a business, it's important to understand how the business makes a profit. A company needs a good business model and a good profit model. A business sells products or services and earns a certain amount of margin on each unit sold. The number of units sold is the sales volume during the reporting period. The business subtracts the amount of fixed expenses for the period, which gives them the operating profit before interest and income tax. http://info5000.com/ACCOUNTING/how-is-accounting-used-in-business.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT There are many different careers in the field of accounting ranging from entry-level bookkeeping to the Chief Financial Officer of a company. To achieve positions with more responsibility and higher salaries, it's necessary to have a degree in accounting as well as achieve various professional designations. http://info5000.com/ACCOUNTING/Careers.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT It might seem like a no-brainer to define just exactly what profit and loss are. But of course these have definitions like everything else. Profit can be called different things, for a start. It's sometimes called net income or net earnings. Businesses that sell products and services generate profit from the sales of those products or services and from controlling the attendant costs of running the business. Profit can also be referred to as Return on Investment, or ROI. While some definitions limit ROI to profit on investments in such securities as stocks or bonds, many companies use this term to refer to short-term and long-term business results. Profit is also sometimes called taxable income. http://info5000.com/ACCOUNTING/profit-and-loss.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Most people probably think of bookkeeping and accounting as the same thing, but bookkeeping is really one function of accounting, while accounting encompasses many functions involved in managing the financial affairs of a business. Accountants prepare reports based, in part, on the work of bookkeepers. http://info5000.com/ACCOUNTING/bookkeeping-basics.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Direct costs are those costs that cann be directly attributed to a product or product line, or to one source of sales revenue, or one business unit or operation of the business. An example of a direct cost would be the cost of tires on a new automobile. http://info5000.com/ACCOUNTING/types-of-costs.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Accountants and auditors help to ensure that the Nation's firms are run efficiently, its public records kept accurately, and its taxes paid properly and on time. They perform these vital functions by offering an increasingly wide array of business and accounting services, including public, management, and government accounting, as well as internal auditing, to their clients. Beyond carrying out the fundamental tasks of the occupation-preparing, analyzing, and verifying financial documents in order to provide information to clients-many accountants now are required to possess a wide range of knowledge and skills. Accountants and auditors are broadening the services they offer to include budget analysis, financial and investment planning, information technology consulting, and limited legal services. http://info5000.com/ACCOUNTING/what-are-auditors.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Measuring profits or net income is the most important thing accountants do. The second most important task is measuring costs. Costs are extremely important to running a business and managing them effectively can make a substantial difference in a company's bottom line. http://info5000.com/ACCOUNTING/measuring-costs.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT If you don't keep track of how much money you're making, you have no idea whether your business is successful or not. You can't tell how well your marketing is working. And I don't just mean you should know the amount of your total sales or gross revenue. You need to know what your net profit is. If you don't, there's no way you can know how to increase it. http://info5000.com/ACCOUNTING/managing-the-bottom-line.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Indpendent CPA auditors are like referees in the financial reporting arena. The CPA comes in, does an audit of the business's accounting system and methods and gives a report that is attached to the company's financial statements. Publicly owned businesses are required to have their annual financial reports audited by independent CPA firms and any privately owned businesses have audits done as well because they know that an audit report will add credibility to their financial reports. http://info5000.com/ACCOUNTING/what-are-independent-auditors.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Forensic accounting financial investigative specialists work with financial information for the purpose of conveying complicated issues in a manner that others can easily understand. While some forensic accountants and forensic accounting specialists are engaged in the public practice of forensic examination, others work in private industry for such entities as banks and insurance companies or governmental entities such as sheriff and police departments, the Federal Bureau of Investigation (FBI), and the Internal Revenue Service (IRS). http://info5000.com/ACCOUNTING/who-uses-forensic-accountants.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Accounting has been defined as, by Professor of Accounting at the University of Michigan William A Paton as having one basic function: http://info5000.com/ACCOUNTING/basic-accounting-principles.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Most businesses start out as a small company, owned by one person or by a partnership. The most common type of business when there are multiple owners is a corporation. The law sees a corporation as real, live person. Like an adult, a corporation is treated as a distinct and independent individual who has rights and responsibilities. A corporation's http://info5000.com/ACCOUNTING/what-is-a-corporation.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT A sole proprietorship is the business or an individual who has decided not to carry his business as a separate legal entity, such as a corporation, partnership or limited liability company. This kind of business is not a separate entity. Any time a person regularly provides services for a fee, sells things at a flea market or engage in any business activity whose primary purpose is to make a profit, that person is a sole proprietor. If they carry on business activity to make profit or income, the IRS requires that you file a separate Schedule C http://info5000.com/ACCOUNTING/what-is-a-sole-proprietorship.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT While many businesses assume that accountants are bound by generally accepted accounting practices and that these are inviolate, nothing could be further from the truth. Everything is subject to interpretation, and GAAP is no different. For one thing, GAAP themselves permit alternative accounting methods to be used for certain expenses and for revenue in certain specialized types of businesses. For another, GAAP methods require that decisions be made about the timing for recording revenue and expenses, or they require that key factors be quantified. Deciding on the timing of revenue and expenses and putting definite values on these factors require judgments, estimates and interpretations. http://info5000.com/ACCOUNTING/about-gaap.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Accountants are responsible for preparing three primary types of financial statements for a business. The income statement reports the profit-making activities of the business and the bottom-line profit or loss for a specified period. The balance sheets reports the financial position of the business at a specific point in time, ofteh the last day of the period. and the statement of cash flows reports how much cash was generated from profit what the business did with this money. http://info5000.com/ACCOUNTING/making-a-profit.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Financial statements are the backbone of a complete financial report. In fact, a financial report is not complete if the three primary financial statements are not included. but a financial report is much more than just those statements. A financial report requires disclosures. This term refers to additional information provided in a financial report. Therefore, any comprehensive and ethical financial report must include not only the primary financial statements, but disclosures as well. http://info5000.com/ACCOUNTING/disclosure.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT The dividend yield ratio tells investors how much cash income they're receiving on their stock investment in a business. This is calculated by dividing the annual cash dividend per share by the current market price of the stock. This can be compared with the interest rate on high-grade debt securities that pay interest, such as Treasure bonds and Treasury notes, which are the safest. http://info5000.com/ACCOUNTING/what-are-other-ratios.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Most audit reports on financial statements give the business a clean bill of health, or a clean opinion. At the other end of the spectrum, the auditor may state that the financial statements are misleading and should not be relied upon. This negative audit report is called an adverse opinion. That's the big stick that auditors carry. They have the power to give a company's financial statements an adverse opinion and no business wants that. The threat of an adverse opinion almost always motivates a business to give way to the auditor and change its accounting or disclosure in order to avoid getting the kiss of death of an adverse opinion. An adverse audit opinion says that the financial statements of the business are misleading. The SEC does not tolerate adverse opinions by auditors of public businesses; it would suspend trading in a company's stock share if the company received an adverse opinion from its CPA auditor. http://info5000.com/ACCOUNTING/what-does-an-audit-report-contain.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Forensic accounting is the practice of utilizing accounting, auditing, and investigative skills to assist in legal matters. It encompasses 2 main areas - litigation support, investigation, and dispute resolution. Litigation support represents the factual presentation of economic issues related to existing or pending litigation. In this capacity, the forensic accounting professional quantifies damages sustained by parties involved in legal disputes and can assist in resolving disputes, even before they reach the courtroom. If a dispute reaches the courtroom, the forensic accountant may testify as an expert witness. http://info5000.com/ACCOUNTING/what-is-forensic-accounting.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Accounting fraud is a deliberate and improper manipulation of the recording of sales revenue andor expenses in order to make a company's profit performance appear better than it actually is. Some things that companies do that can constitute fraud are: http://info5000.com/ACCOUNTING/what-is-accounting-fraud.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT When a corporation deliberately conceals or skews information to appear healthy and successful to its shareholders, it has committed corporate or shareholder fraud. Corporate fraud may involve a few individuals or many, depending on the extent to which employees are informed of their company's financial practices. Directors of corporations may fudge financial records or disguise inappropriate spending. Fraud committed by corporations can be devastating, not only for outside investors who have made share purchases based on false information, but for employees who, through 401ks, have invested their retirement savings in company stock. http://info5000.com/ACCOUNTING/what-happened-in-corporate-accounting-scandals.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT The Sarbanes-Oxley Act of 2002 is a United States federal law passed in response to the recent major corporate and accounting scandals including those at Enron, Tyco International, and WorldCom (now MCI). These scandals resulted in a decline of public trust in accounting and reporting practices. Named after sponsors Senator Paul Sarbanes (D-Md.) and Representative Michael G. Oxley (R-Oh.), the Act was approved by the House by a vote of 423-3 and by the Senate 99-0. The legislation is wide-ranging and establishes new or enhanced standards for all U.S. public company Boards, Management, and public accounting firms. The first and most important part of the Act establishes a new quasi-public agency, the Public Company Accounting Oversight Board, which is charged with overseeing and disciplining accounting firms in their roles as auditors of public companies. Some of the major provisions of the Sarbanes-Oxley Act's include: http://info5000.com/ACCOUNTING/what-is-the-sarbanes-oxley-act.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT The FASB is one organization that provides standardized guidelines for financial reporting. The mission of the Financial Accounting Standards Board (FASB) is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information. http://info5000.com/ACCOUNTING/what-is-the-fasb.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Making a profit in a business is derived from several different areas. It can get a little complicated because just as in our personal lives, business is run on credit as well. Many businesses sell their products to their customers on credit. Accountants use an asset account called accounts receivable to record the total amount owed to the business by its customers who haven't paid the balance in full yet. Much of the time, a business hasn't collected its receivables in full by the end of the fiscal year, especially for such credit sales that could be transacted near the end of the accounting period. http://info5000.com/ACCOUNTING/assets-and-liabilities.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Publicly owned companies must report earnings per share (EPS) below the net income line in their income statements. This is mandated by generally accepted accounting practices (GAAP). The EPS gives investors a means of determining the amount the business earned on its stock share investments. In other words, EPS tells investors how much net income the business earned for each stock share they own. It's calculated by dividing net income by the total number of capital stock share. It's important to the stockholders who want the net income of the business to be communicated to them on a per share basis so they can compare it with the market price of their shares. http://info5000.com/ACCOUNTING/earnings-per-share.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Everyone knows at least a little about the Enron story and the devastation it created in the lives of is employees. It's a story that belongs in any discussion of ethical accounting processes and what happens when accounting standards and ethics are discarded for personal greed. http://info5000.com/ACCOUNTING/what-happened-at-enron.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT The priceearning (PE) ratio is another measurement that's of particular interest to investors in public businesses. The PE ratio gives you an idea of how much you're paying in the current price for stock shares for each dollar of earning. Earnings prop up the market value of stock shares, not the book value of the stock shares that's reported in the balance sheet. http://info5000.com/ACCOUNTING/what-is-price-earnings-ratio.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT A balance sheet is a quick picture of the financial condition of a business at a specific period in time. The activities of a business fall into two separate groups that are reported by an accountant. They are profit-making activities, which includes sales and expenses. This can also be referred to as operating activities. There are also financing and investing activities that include securing money from debt and equity sources of capital, returning capital to these sources, making distributions from profit to the owners, making investments in assets and eventually disposing of the assets. http://info5000.com/ACCOUNTING/balance-sheet.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT If a business breaks the rules of accounting and ethics, it can be liable for legal sanctions against it. It can deliberately deceive its investors and lenders with false or misleading numbers in its financial report. That's where audits come in. Audits are one means of keeping misleading financial reporting to a minimum. CPA auditors are like highway patrol officers who enforce traffic laws and issue tickets to keep speeding to a minimum. An audit exam can uncover problems that the business was not aware of. http://info5000.com/ACCOUNTING/what-does-an-audit-do.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Depreciation is a term we hear about frequently, but don't really understand. It's an essential component of accounting however. Depreciation is an expense that's recorded at the same time and in the same period as other accounts. Long-term operating assets that are not held for sale in the course of business are called fixed assets. Fixed assets include buildings, machinery, office equipment, vehicles, computers and other equipment. It can also include items such as shelves and cabinets. Depreciation refers to spreading out the cost of a fixed asset over the years of its useful life to a business, instead of charging the entire cost to expense in the year the asset was purchased. That way, each year that the equipment or asset is used bears a share of the total cost. As an example, cars and trucks are typically depreciated over five years. The idea is to charge a fraction of the total cost to depreciation expense during each of the five years, rather than just the first year. http://info5000.com/ACCOUNTING/depreciation.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Inventory is usually the largest current asset of a business that sells products. If the inventory account is greater at the end of the period than at the start of the reporting period, the amount the business actually paid in cash for that inventory is more than what the business recorded as its cost of good sold expense. When that occurs, the accountant deducts the inventory increase from net income for determining cash flow from profit. http://info5000.com/ACCOUNTING/inventory-and-expenses.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT So what goes on the accounting and bookkeeping departments? What do these people do on a daily basis? http://info5000.com/ACCOUNTING/bookkeeping.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT A public corporation is a business whose securities are traded on the public stock exchanges, such as the New York Stock Exchange and Nasdaq. A private company is held solely by its owners and is not traded publicly. When the shareholders of a private business receive the periodical financial reports, they are entitled to assume that the company's financial statements and footnotes are prepared in accordance with GAAP. Otherwise the president of chief officer of the business should clearly warn the shareholders that GAAP have not been followed in one or more respects. The content of a private business's annual financial report is often minimal. It includes the three primary financial statements - the balance sheet, income statement and statement of cash flows. There's generally no letter from the chief executive, no photographs, no charts. http://info5000.com/ACCOUNTING/private-vs-public-reporting.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT In most businesses, what drives the balance sheet are sales and expenses. In other words, they cause the assets and liabilities in a business. One of the more complicated accounting items are the accounts receivable. As a hypothetical situation, imagine a business that offers all its customers a 30-day credit period, which is fairly common in transactions between businesses, (not transactions between a business and individual consumers). http://info5000.com/ACCOUNTING/revenue-and-receivables.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT The first and most important part of an income statement is the line reporting sales revenue. Businesses need to be consistent from year to year regarding when they record sales. For some business, the timing of recording sales revenue is a major problem, especially when the final acceptance by the customer depends on performance tests or other conditions that have to be satisfied. For example, when does an ad agency report the sales revenue for a campaign it's prepared for its client? When the work is completed and sent to the client for approval? When the client approves it? When the ads appear in the media? Or when the billing is complete? These are issues a company must decide on for reporting sales revenue, and they must be consistent each year, and the timing of reporting should be noted on the financial statement. http://info5000.com/ACCOUNTING/parts-of-an-income-statement,-part-1.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT It's obvious financial statement have a lot of numbers in them and at first glance it can seem unwieldy to read and understand. One way to interpret a financial report is to compute ratios, which means, divide a particular number in the financial report by another. Financial statement ratios are also useful because they enable the reader to compare a business's current performance with its past performance or with another business's performance, regardless of whether sales revenue or net income was bigger or smaller for the other years or the other business. In order words, using ratios can cancel out difference in company sizes. http://info5000.com/ACCOUNTING/how-to-analyze-a-financial-statement.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT It would probably be ideal if business and life were as simple as producing goods, selling them and recording the profits. But there are often circumstances that disrupt the cycle, and it's part of the accountants job to report these as well. Changes in the business climate, or cost of goods or any number of things can lead to exceptional or extraordinary gains and losses in a business. Some things that can alter the income statement can include downsizing or restructuring the business. This used to be a rare thing in the business environment, but is now fairly commonplace. Usually it's done to offset losses in other areas and to decrease the cost of employees' salaries and benefits. However, there are costs involved with this as well, such as severance pay, outplacement services, and retirement costs. http://info5000.com/ACCOUNTING/gains-and-losses.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Building a financial cushion for your business is never easy. Experts say that businesses should have anywhere from six to nine months worth of income safely stored away in the bank. If you're a business grossing 250,000 per month, the mere thought of saving over 1.5 million dollars in a savings account will either have you collapsing from fits of laughter or from the paralyzing panic that has just set in. What may be a nice well-advised idea in theory can easily be tossed right out the window when you're just barely making payroll each month. So how is a small business owner to even begin a prudent savings program for long-term success? http://info5000.com/ACCOUNTING/building-a-cash-cushion.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Of course profit and cost of goods sold expense are the two most critical components of an income statement, or at least they're what people will look at first. But an income statement is truly the sum of its parts, and they all need to be considered carefully, consistently and accurately. http://info5000.com/ACCOUNTING/parts-of-an-income-statement,-part-2.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT In an accountant's reporting systems, depreciation of a business's fixed assets such as its buildings, equipment, computers, etc. is not recorded as a cash outlay. When an accountant measures profit on the accrual basis of accounting, he or she counts depreciation as an expense. Buildings, machinery, tools, vehicles and furniture all have a limited useful life. All fixed assets, except for actual land, have a limited lifetime of usefulness to a business. Depreciation is the method of accounting that allocates the total cost of fixed assets to each year of their use in helping the business generate revenue. http://info5000.com/ACCOUNTING/depreciation-reporting.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Anyone who's worked in an office at some point or another has had to go to accounting. They're the people who pay and send out the bills that keep the business running. They do a lot more than that, though. Sometimes referred to as http://info5000.com/ACCOUNTING/what-is-accounting-anyway.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Investors calculate the acid test ratio, also known as the quick ratio or the pounce ratio. This ratio excludes inventory and prepaid expenses, which the current ratio includes, and it limits assets to cash and items that the business can quickly convert to cash. This limited category of assets is known as quick or liquid assets. The acid-text ratio is calculated by dividing the liquid assets by the total current liabilities. http://info5000.com/ACCOUNTING/what-is-acid-test-ratio-and-roa-ratio.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT Financial managers can do certain things to increase or decrease net income that's recorded in the year. This is called profit smoothing, income smoothing or just plain old window dressing. This isn't the same as fraud, or cooking the books. http://info5000.com/ACCOUNTING/what-is-financial-window-dressing.html info5000.com@info5000.com (Carson Danfield) Thu, 2 Sep 2010 14:31:52 PDT