Bookkeeping

As a result, payback period is best used in conjunction with other metrics. The answer is found by dividing $200,000 by $100,000, which is two years. The second project will take less time to pay back, and the company’s earnings potential is greater. The reason

In the case of personal bank accounts, like checking accounts, this is the process of comparing your monthly bank statement against your personal records to make sure they match. Many banks allow you to opt for fee-free electronic bank statements delivered to your email, but

Deposits in transit are amounts that are received and recorded by the business but are not yet recorded by the bank. Businesses maintain a cash book to record both bank transactions as well as cash transactions. The cash column in the cash book shows the

With the cash basis method, the company recognizes the sale in September, when cash is received. Whereas with the accrual basis accounting, the company recognizes the sale in August, when it is issued the invoice. The cash basis of accounting recognizes revenues when cash is

However, your earnings as an employee may be subject to FICA (social security tax and Medicare) and income tax withholding. Working as a 1099 contractor in the United States means taxes can be a bit more intricate. Unlike employees, you’re responsible for setting aside a

For example, if shares of a company trade in very low volumes, it may not be possible to convert them to cash without impacting their market value. These shares would not be considered liquid and, therefore, would not have their value entered into the Current

The root cause of the bond discount is the bonds have a stated interest rate which is lower than the market interest rate for similar bonds. A callable bond always bears some probability of being called before the maturity date. Investors will realize a slightly

A T-Account can be created by manually drawing out the two columns, labeling each one as Debit and Credit. Alternatively, many accounting software packages allow users to enter accounts they wish to track and automatically generate a T-Account. It can be used to balance books

A debit, on the other hand, adds to an expense account, while a credit deducts from it. These terms are used in every accounting document, including general ledgers, cash flow statements, trial balances, income statements, and balance sheets. T-accounts can also impact balance sheet accounts

The asset is the bank account — just like your cash account — and the liability recognizes that the bank account balance doesn’t belong to your business. The asset and liability amounts should always match, making no impact on your financial statements. Some states have