Bookkeeping 101

The locations are why revenue is often called the top-line number, while net income or profit is called the bottom line number. Revenue can be broken down and listed as separate line items on a company’s income statement based on the type of revenue.

For example, many companies list operating income separately, which is the money earned from a company’s core business operations. Conversely, non-operating revenue is the money earned from secondary sources, which could be investment income or proceeds from the sale of an asset. A company’s revenue usually includes income from both cash and credit sales. Using depreciation, a business expenses a portion of the asset’s value over each year of its useful life, instead of allocating the Continue reading “Sales Revenue”

Their gross revenue was $1.5 million and their COGS was $500,000, leading to a gross income of $1 million. But now the remainder of the business’s expenses have to be taken into account, and combined they total up to $400,000.

But getting a grasp on these concepts is the first step toward evaluating your company’s efficiency and profitability. The revenue number is the income a company generatesbeforeany expenses are taken out. Therefore, when a company has “top-line growth,” the company is experiencing an increase in gross sales or revenue.

Revenue vs. Profit: What’s the Difference?

This means that each year that the equipment or machinery is put to use, the cost associated with using up the asset is recorded. The rate at which a Continue reading “Revenue Definition”

To calculate the working capital, compare a company’s current assets to its current liabilities. Current assets listed on a company’s balance sheet include cash, accounts receivable, inventory and other assets that are expected to be liquidated or turned into cash in less than one year. Current liabilities include accounts payable, wages, taxes payable, and the current portion of long-term debt. Restricted cash is the amount of cash and cash equivalent items which are restricted for withdrawal and usage.

Quick Ratio – What is a Quick Ratio?

One of the company’s crucial health indicators is its ability to generate cash and cash equivalents. So, a company with relatively high net assets and significantly less cash and cash equivalents Continue reading “Working capital in valuation”

In this case, the prorated charge is $6 ($10/30 days x 18 days). You’re paying for 18 days of the service instead of a full month. The first month’s rent for an apartment you move into on Jun. 10th will be prorated according to the number of days in the month or a uniform 30 days. The uniform 30 days in some rental agreements is called a “banker’s month.” If your rent is $900 a month and June has 30 days, you will pay for 21 days at $30 a day, or a total $630. Multiply the number of days the customer did not use the service by the per-day prorated rate.

When you make a change to your auto insurance, you might need to do it in the middle of your billing cycle. If the change you make impacts your insurance cost, then your insurance Continue reading “Prorated Merit Increase”

At the end of any accounting period, the amount of the insurance premiums that remain prepaid should be reported in the current asset account, Prepaid Insurance. The prepaid amount will be reported on the balance sheet after inventory and could part of an item described as prepaid expenses. A common prepaid expense is the six-month insurance premium that is paid in advance for insurance coverage on a company’s vehicles. The amount paid is often recorded in the current asset account Prepaid Insurance. If the company issues monthly financial statements, its income statement will report Insurance Expense which is one-sixth of the six-month premium.

A prepaid expense is carried on the balance sheet of an organization as a current asset Continue reading “Prepaid Insurance”

There are ways around the emotion, and it starts with being honest with yourself about why you’re feeling this way, and remembering to keep communication open and honest with your partner. Instead of continuing to wallow (if that’s where you currently are in your jealousy phase), here’s how to stop being jealous. We talked about our individual journeys, how a lot of work comes from knowing the “right” people, that my path wasn’t meant to mirror theirs.

“The most freeing thing one can do in a relationship is let go of worries about what all could possibly go wrong and focus on what is going right,” Chronister says. For instance, Chronister suggests placing your focus on the things your partner does that you’re grateful for, and reminding Continue reading “petty”

Instead of being a form of debt equity, preferred stock works more like a bond than it does like a share in a company. Companies issue preferred stock as a way to obtain equity financing without sacrificing voting rights. A participating preferred dividend is a type of preferred stock that pays a set rate of interest per year. The advantage of this type of preferred stock is that investors can also receive a portion of retained earnings paid to common shareholders in addition to the fixed dividend payment.

This differs from how common stock shareholders, who benefit whenever a company grows, are paid. Why companies issue preferred stock is different than the reason they go public and offer common stock. Preferred stock is a form of Continue reading “Preferred Stock Definition”

How to Calculate Owner’s Equity: Definition, Formula & Examples

Revenue is only increased when receivables are converted into cash inflows through the collection. Revenue represents the total income of a company before deducting expenses.

Owner’s Equity Examples

Split between assets, liabilities, and equity, a company’s balance sheet provides for metric analysis of a capital structure. Debt financing provides a cash capital asset that must be repaid over time through scheduled liabilities. Equity financing provides cash capital that is also reported in the equity portion of the balance sheet with an expectation of return for the investing shareholders.

If the treasury stock is sold at equal to its repurchase price, the removal of Continue reading “Paid in capital”

Federal wage rates and overtime requirements apply to qualifying employees. The Arkansas Dep’t of Labor website may have additional specific information on wage laws in the state. $8.75 an hour for employers with 6 or more employees at a single location.

The New York Department of Labor website may have additional specific information on wage laws in the state. $9.00 an hour for employers with four or more employees. The Nebraska Department of Labor website may have additional specific information on wage laws in the state.

Should the federal minimum wage be increased to match or exceed that of the state, Connecticut’s minimum wage automatically increases by .5% above the federal wage. Dep’t of Labor website may have additional specific Continue reading “What are the differences between idle time and overtime in cost accounting?”

Of these three options, fixed assets is the only classification that qualifies to itemize office equipment. It is important to note that most office equipment and supplies don’t qualify because the expense is not large enough to meet the capitalization threshold.

Office equipment

Here are a few types of costs for new business owners to consider. While every type of business has its own financing needs, experts have some tips to help you figure out how much cash you’ll require.

Employers are legally obliged to provide their employees with such equipment where it’s necessary. You’ll need to assess the risks of using the equipment as part of your overall health and safety risk assessment. To be successful in the office environment, Continue reading “IT Equipment”