Recent Articles

Depreciation

Depreciation is the expensing of an asset purchase over its life expectancy. It is most commonly used to allocate a prorated portion of an asset purchase such as heavy equipment, vehicles, buildings, and othe large ticket items.

EBITDA

02/03/2017

EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization.   The value is generally known as operational profit before capital expenditures and tax obligations.   EBITDA is frequently used for estimating value of [...]

Bookkeeping – Schedules (Lesson 23)

01/18/2017

In accounting there are books (journals) and ledgers for source entry of information.  A trial balance is used to monitor the types of accounts.   With the use of parent-child accounts and control accounts bookkeepers can generate a wide array of [...]

Economic Substance Principle

12/26/2016

The Internal Revenue Service uses an economic substance test to identify sham transactions that exist solely to reduce or eliminate taxes.    In addition,  the courts use this same doctrine to rule on the legitimacy of activity between two or [...]

Internal Controls – Fixed Assets

07/06/2015

Internal controls is an accounting system to aid in proper reporting of existing assets and liabilities.  Internal controls over fixed assets alleviate two distinct risks.  The primary risk is physical in nature and relates to the asset getting [...]

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 [...]

Tangible and Intangible – Business Definitions and Use

11/03/2014

Tangible and intangible are terms with several different meanings.  A lot of well educated folks have a difficult time providing an all inclusive definition.  Someone once described tangible as ‘something that can be burned’.  Well, land is [...]

Hobbies – Business Perspective and Tax Compliance

02/08/2014

Many people turn their hobbies into a business function.  Not so much to make a living or make big profits, but more to help offset the costs of the hobby.  Whenever you go to one of those community fairs, the vendors at the respective booths are [...]

Accelerated Depreciation – An Explanation

12/17/2013

When it comes to depreciation, no two businesses are alike. Unlike traditional straight line depreciation where the asset value is cost out to depreciation expense in equal increments over a given life expectancy, accelerated depreciation expenses [...]

The Fixed Assets Section of the Balance Sheet

09/24/2013

The fixed assets section of the balance sheet is one of the easiest sections to read and understand.  This article is written to describe and illustrate some simple examples of the fixed assets section.  I am not teaching the reader about the [...]

Internal Revenue Service (IRS) Definition of an Expense

04/03/2013

The Internal Revenue Service defines a business expense as ‘ordinary’ and ‘necessary’.  Ordinary expenses are those costs typically incurred in your industry.  So a restaurant would not ordinarily purchase vaccines.  And a medical [...]
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