Accounting Concepts and Principles

Working Trial Balance

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 […]

Accounting Concepts and Principles

Gross and Net Sales

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 […]

Accounting Concepts and Principles

Amortization of Financing Costs

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 […]

Accounting Concepts and Principles

Breakeven Analysis – Fundamentals

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 […]

Accounting Concepts and Principles

Treasury Stock

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 […]

Accounting Concepts and Principles

Cost of Sales – Various Formats

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 […]

Accounting Concepts and Principles

Various Sets of Accounting Books

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 […]