Recent Articles

Accounting Concepts and Principles

Accounting is the measurement of economic activity for a business operation. It is customarily reported via financial information. Learn about the basic concepts and the associated principles used in accounting to report financial information.

Working Trial Balance

02/18/2017

The accounting profession uses various tools to generate accurate accounting information at the close of accounting cycles (monthly, quarterly and annually). The primary document is the working trial balance.  It is very similar to the traitional [...]

Gross and Net Sales

01/11/2017

Many of the business performance standards are measured against a baseline.  For the bulk of production and operation performance tools the baseline is net sales.  The key to an accurate performance standard is having an exact sales figure.  As [...]

Amortization of Financing Costs

01/11/2017

When a business acquires a loan there are typically closing costs involved.   Generally Accepted Accounting Principles (GAAP) require these costs to be amortized (allocated) over the life of the loan.  There are several principles the reader [...]

Breakeven Analysis – Fundamentals

12/28/2016

Breakeven analysis is a managerial (cost) accounting tool used to examine the relationship of price to cost of a product.   It also considers various sales volumes and the effect on profit given the different relationships of price to cost.   [...]

Treasury Stock

12/21/2015

Those corporations doing well and flush with cash sometimes buy back stock from their investors. Once purchased back by the company the stock is called treasury stock. In large corporations the buy back often involves a small percentage of [...]

Cost of Sales – Various Formats

01/27/2015

Many business owners misunderstand the use of term ‘Cost of Sales’ by restricting it to just simply ‘Cost of Goods Sold’.  Basically, most business entrepreneurs and even accountants don’t realize that it has several different names and [...]

Various Sets of Accounting Books

12/27/2014

Accounting’s primary purpose is to measure economic activity.  There are several different methods to determine the economic value generated in your business each year.  In accounting this is referred to as sets of books.  There are four basic [...]

Fixed Costs – Explanation and Examples

02/19/2014

‘Fixed costs’ is a business term used mostly in cost accounting.  It has several meanings based on its usage.  The most common definition associated with fixed costs is expenses that must be paid regardless of production or sales volume.  The [...]

Quick Ratio – Definition, Explanation and Proper Use

01/14/2014

The quick ratio is a formula used in business to identify the ability of a business to pay its current liabilities.  It is also known as the ‘Acid Test’ formula (ratio).  In the large markets this formula is one of the financial industry [...]
1 2 3