Accrual Accounting vs Cash Basis Accounting: Whats the Difference?

Sage makes no representations or warranties of any kind, express or implied, about the completeness or accuracy of this article and related content. Your business might look profitable on paper, but your bank account could be empty. Both methods are helpful, but choosing the right one for your business can help avoid headaches down the…

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If a business buys any items from its vendors and pays a sales tax on these items, it charges the sales tax to expense in the current period, along with the cost of the items purchased. Sales Tax Payable is recognized as a liability that has to be usually paid within one year from the…

Read more about The Basics of Sales Tax Accounting Journal Entries

QuickBooks Plus is the most popular plan for businesses since it includes features such as inventory tracking, project management and tax support. Midsized businesses with several customers or clients might benefit from the ability to track profitability with QuickBooks Plus. Once your business is large enough to require more automation and more employees, the Plus…

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It’s thus typical for management personnel to set expectations and benchmarks for both costs and output, while the manufacturing activity is still in its planning stage before the production process even starts. Efficiency variance is the difference between the theoretical amount of inputs required to produce a unit of output and the actual number of…

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For example, if the IRS flags a tax deduction they deem suspicious, you can easily trace the number back to your ledger to double-check its accuracy and provide support for the write-off. Business News Daily provides resources, advice and product reviews to drive business growth. Our mission is to equip business owners with the knowledge…

Read more about Mastering the Accounting Cycle: A Step-by-Step Guide

He received a $400 insurance bill for his shop two days later. Essentially, the representation equates all uses of capital (assets) to all sources of capital, where debt capital leads to liabilities and equity capital leads to shareholders’ equity. It can be defined as the total number of dollars that a company would have left…

Read more about Accounting Equations Overview, Formulas & Examples Lesson

Obsolete, Unsold and Unusable Inventory are contra asset accounts with a credit balance that reduce the normal debit balance of the main Inventory asset account in order to present the net value of inventory on a company’s balance sheet. Discount on Notes Receivable is a contra asset account with a credit balance that reduces the…

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The invoice number should always be clearly stated on the invoice – without an invoice number, an invoice is not considered a legal document. Clear invoices foster trust and transparency, ensuring clients understand their charges. This clarity builds stronger relationships, encouraging timely payments and repeat business. By maintaining professionalism, creators can cultivate a positive rapport…

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These principles ensure consistency, transparency, and reliability in financial statements, allowing businesses to present their financial performance accurately. Several fundamental accounting principles serve as the foundation for financial reporting. These principles include the accrual principle, revenue recognition principle, matching principle, historical cost principle, materiality principle, consistency principle, and others. While there is no fixed number…

Read more about Accounting Principles: What They Are and How GAAP and IFRS Work

Suppose we’re tasked with calculating the net working capital (NWC) of a company with the following balance sheet data. To reiterate, a positive NWC value is perceived favorably, whereas a negative NWC presents a potential risk of near-term insolvency. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Excessive…

Read more about Understanding Changes in Working Capital: Formula and Implications