Bookkeeping

$3,200 will be the annual depreciation expense for the life of the asset. If an asset is sold or disposed of, the asset’s accumulated depreciation is removed from the balance sheet. Net book value isn’t necessarily reflective of the market value of an asset. The recognition of depreciation expense is unrelated to cash flows, so it is considered a noncash expense. Instead, the only cash flows relat...

Accounts receivable represents the credit sales a company makes to its customers that have been billed but not yet paid by the customer. Getting a feel for how much customers could owe the company on credit at the end of the year helps a company project sales, expenses and cash flow needs, among other financial metrics. Estimate items that have no concrete relation to sales figures using a differe...

These percentages are then used to project the future value of each line item using estimates of future sales. To obtain a more precise projection of the firm’s future financing needs, however, the preparation of a cash budget is required. Some of the most common ratios include gross margin, profit margin, operating margin, and earnings per share. The price per earnings ratio can help investors de...

Under the Sarbanes-Oxley Act, which was passed in 2002, accountants were subject to tougher restrictions about their consulting assignments. Renamed several times over the years, the organization has been known as the American Institute of Certified Public Accountants (AICPA) since 1957. While this isn’t a CPA Exam requirement, all states and territories do have an experience requirement to gain l...

If you do your own accounting and you use the cash basis system, you likely won’t need to make adjusting entries. To make an adjusting entry, you don’t literally go back and change a journal entry—there’s no eraser or delete key involved. If accountant does not reverse the transactions, he must be aware of the accrue amount and nature of the transaction. And when https://quick-bookkeeping.net/ the...

The best way to prepare for the CPA exam is to start studying early. As with other aspects of CPA exam planning, refer interest expense to NASBA for state-specific information. For additional state-specific information, refer to NASBA’s CPA exam portal. The credential provides CPAs with a diverse range of career path options as a trusted business advisor in a highly respected and prestigious...

Accrual accounting can be beneficial to a business with the desire and resources to implement it correctly. Talk to your accountant to discuss the individual advantages and disadvantages of implementing accrual accounting in your business. Suppose you provide music lessons to students within the county of your residence. As a music instructor, you occasionally require instruments to be serviced fo...

This method is more accurate than cash basis accounting because it tracks the movement of capital through a company and helps it prepare its financial statements. With accrual accounting, you would book the revenue from the job in December, the same month that you paid for the construction materials. Accrual basis accounting is much more accurate than cash basis accounting in the sense that it is ...

When the unit of production method is used to gauge depreciation of an asset, the useful life of the asset is related to its usage over time, in terms of the units it produces for the period it was in use. Using this method, the actual usage of an item counts more than the passage of time. If the asset is rarely used, its depreciation will be lesser and an asset will have greater depreciation for ...

It ends when the cost of the unit is fully recovered or the unit has produced all units within its estimated production capacity, whichever comes first. Estimate the total number of hours of usage of the asset, or the total number of units to be produced by it over its useful life. A second justification for accelerated depreciation is that some types of property and equipment lose value more quic...

While stockholders acquire their shares from a specific firm, if they so want, they may also do it on a stock market. Shareholders have the power to impact management decisions and strategic policies. However, shareholders are often most concerned with short-term actions that affect stock prices. The content created by our editorial staff is objective, factual, and not influenced by our advertiser...

Shareholders are important for your company, but as a project lead or program manager you should really prioritize stakeholder theory. That’s because shareholders are usually most concerned with short-term goals that impact stock prices, rather than the long-term health of your company. If you prioritize short-term wins and revenue gains over everything else, you might sacrifice your company cultu...