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Current Ratio


The current ratio is an inappropriate relationship to use or rely on in small business.   The ratio is best suited for large publicly traded organizations.   This article explains the basic formula for the current ratio, how to identify the ratio [...]

Bookkeeping – Cash Disbursements (Lesson 45)


Cash disbursements is the process of remitting payment to vendors, suppliers and third party contractual obligations.   Better managed offices pay bills in regular cycles including weekly and monthly obligations.   Preparation, reconciliation and [...]

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 [...]

Bookkeeping – Accounts Payable Management (Lesson 43)


With small business the biggest hearache for the bookkeeper is addressing the daily phone calls and letters (bills, statements and notices) related to purchases.   Vendors regulary communicate with the accounts payalbe manager wanting to know [...]

Bookkeeping – Purchases Via Credit Cards (Lesson 42)


It is more common in small business, especially small contractors, to buy materials using credit cards.  Often the credit card accounts are the owner’s personal accounts.  Sometimes the cards are merchant cards.  As the bookkeeper it is your [...]

Bookkeeping – Tracking Purchases (Lesson 41)


In business purchases describes the process of acquiring the necessary goods and materials for operations.  Many novice business individuals believe the term is strictly limited to those materials purchased for resale.  In reality it is much [...]

Bookkeeping – Tracking Sales Tax (Lesson 40)


Many businesses especially retail have to collect sales tax as a function of their legal mandate from state governments.  In effect the business is a collection agent for the state.  If properly set up, this collection process is automated using [...]

Bookkeeping – Tracking Returns and Allowances (Lesson 39)


Not every customer is satisfied with the product they purchase.  The old saying of ‘You can’t please everyone all the time’ is true.  This is reality and business management must accept this basic principle.  What is important is the trend [...]
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