By understanding these differentiations, businesses can better analyze and manage their costs, leading to improved financial performance and competitiveness in the market. COGM & COGS are two important metrics used in cost accounting to track the cost of producing and selling a product. A well-designed manufacturing process can avoid overproduction and excess storage costs. To [...]

Also the December 31 balance sheet will report a liability such as utilities payable of $300 to communicate a more accurate measure of obligations at December 31. Accrual accounting also involves adjusting entries to ensure that revenues and expenses are properly matched in the correct accounting period. Well, it’s a method of recording financial transactions [...]

For example, a company may compare the receivables turnover ratios of companies that operate within the same industry. In this example, a company can better understand whether the processing of its credit sales are in line with competitors or whether they are lagging behind its competition. The numerator of the accounts receivable turnover ratio is [...]

ContentWhat is prepaid insurance?How IBRD Is FinancedLiabilities and reservesDon't Have an Account?Register NowHow Does Business Renters Insurance Work?Are Prepaid Expenses Debits or Credits? The interest must be on a debt to buy, build, change, improve, or maintain the cooperative's housing, or on a debt to buy the land. If you paid $600 or more of [...]

An entry will then be created on the books to move this amount from current assets to the expense side. The leftover ($16,000 in this case) will be counted as prepaid insurance for the insurer. Naturally, the leftover will still be counted as an asset on the balance sheet, with the understanding that the full [...]

Like everything else about bookkeeping and accounting, the accounting cycle is a process that can help you categorize and enter your transactions properly. Using the accounting cycle also helps to ensure that you and your accountant both have a complete and accurate overview of the financial health of your business. Once your transactions have been [...]

Even if you’re a small business, and even if you use cash accounting, it can be beneficial to use the accounting cycle. Once this initial review has been completed, and your transactions have been coded properly, you can move on to the next step in the accounting cycle. The purpose of this step is to [...]

If you need assistance in supporting workers’ compensation, retirement plans, and health insurance, ADP offers those services for a fee. It has various other benefits, including legal and an advice line, LifeCare. Finally, it can enroll employees in its program that offers discounts for everything from gym memberships to vacations. For an additional fee, ADP [...]

ContentAccounting 101 for Small BusinessesWhat Is a Balance Sheet?Example of Balance Sheet FormulasShareholder EquityVideo: What Is a Balance Sheet?Importance of Balance Sheets Each category consists of several smaller accounts that break down the specifics of a company's finances. These accounts vary widely by industry, and the same terms can have different implications depending on the [...]

In May, the AICPA Auditing Standards Board approved new quality management standards. CPA firms will need to shift their audit and quality assurance practices from a policies-based approach to a risk-based approach. With this impending change, financial institutions should revisit how they evaluate financial statement risks based on their source. You know you’re using the [...]