If the buyer is looking for a substantial credit line, make sure you review their financials, especially a statement of cash flow. If they are operating in a negative cash position you need to be sure that they will have enough cash available to pay you. Limit their credit line or at the very least change their terms if it looks that they may have a cash flow problem. The credit application form is issued by a supplier or lender with the intent of standardizing (more…) […]
If you have a business – either a sole proprietorship or partnership – you should seriously consider setting it up within an LLC. It will provide you with similar legal protections to a corporation, but enable you to run your company as a small business. Your LLC registered agent will accept legal documents and tax notices on your LLC’s behalf. You will list your registered agent when you file your LLC’s Articles of Organization. LLCs are popular because business owners can avoid th […]
Assets are ordered in terms of liquidity or how long it would take to change into cash. A company’s balance sheet is one of the most important financial statements it will produce—typically on a quarterly or even monthly basis . Since it is just a snapshot in time, it can only use the difference between this point and another single point in time in the past. The line items towards the top of the assets section are the most liquid, meaning those assets can be converted to cash the fastest […]
Evidence obtained directly by the auditor is more reliable than evidence obtained indirectly. Clearly, materiality plays a large role; however, how to measure what information is true and fair or misstated is crucially important. Rights and Obligations — the transactions and disclosures pertain to the entity. Completeness — all balances that should have been recorded have been recorded. Classification — the transactions have been recorded in the appropriate caption. Best Of We’ve tested, […]
An acknowledgement of ownership, receipts are proof of a financial transaction. The IRS requires small businesses to hold onto some receipts to document tax deductible expenses. Dividends consist of company earnings, or profit, which a business pays to its shareholders as a reward for their investment in its equity. Companies may distribute dividends as cash or additional shares of stock. Such decisions include whether to buy blue-chip stocks or loan money (more…) […]
Very small businesses may choose a simple bookkeeping system that records each financial transaction in much the same manner as a checkbook. Businesses that have more complex financial transactions usually choose to use the double-entry accounting process. Financial literacy is important and sharp accounting skills are crucial if you want to succeed in business. From tax planning to making the right decisions based on accurate financial information, solid accounting knowledge is key. The way yo […]
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The balance sheet lists your assets and liabilities, and it gives you a snapshot of how much your company is worth. Types of accounts that affect your income statement include sales, overhead expenses and cost of goods sold. Your balance sheet lists accounts such as inventory, cash, property and equipment, notes payable and accounts receivable. The bookkeeping transactions can be recorded by hand in a journal or using a spreadsheet program like Microsoft Excel. Most businesses now use specializ […]
One of the most important aspects of closing out your business’s financial year is to make sure all income and expenses are recorded and up-to-date. Audit and Ensure Payroll. Roughly 32% of small businesses make a payroll mistake, while the majority states that they have underpaid at least one employee, according to SurePayroll. Protect Your Payroll System. Lastly, you cannot reconcile payroll if you lose all your payroll information. Aside from common cybersecurity threats, additional lo […]
Account NameDebitCreditBond interest expenseXXXPremium on bonds payableXXXCashXXXThe premium on bonds payable is treated as an adjunct liability account. Thus, the total interest expense on premium bonds is equal to the difference between the sum of principal and contracted interest minus the market value of the bond at the date of issuance or the value of premium bonds. Alternatively, the total interest expense to be presented in the income statement is calculated by taking the contracted inte […]
