Recent Articles

Understanding Depreciation

When the owner of a business or a reader of financial statements understands the concept of depreciation, he can better evaluate the business operation. Depreciation is merely matching a long life asset to its contribution to the product production or deliver of service in incremental costs.

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 [...]

The Various Forms of Depreciation

02/22/2013

There are various forms of depreciation used in the small business world.  In general, depreciation is not required but it is advisable.  So a small business owner should understand depreciation and the various forms of how to calculate the [...]

What is Amortization?

01/15/2013

There are three methods of expensing an asset to the income statement.  The most common method is depreciation for fixed assets.  Mining, oil, and natural resource operations use depletion (amount removed versus the estimated volume on hand).  [...]

The Definition of Fixed Assets

01/05/2013

Any tangible item not consumed within one accounting cycle (typically a year) and providing long term utility is referred to as a Fixed Asset.  Traditional images include manufacturing equipment, tools, transportation vehicles, buildings and [...]

Small Business Tax Depreciation – Section 179

12/23/2012

The Internal Revenue Service sets the depreciation allowance based on the Code as promulgated by Congress.  The most commonly referenced section is 179.  This is a form of accelerated depreciation allowing the small business owner the opportunity [...]

How to Read a Balance Sheet – Simple Format

12/17/2012

Reading a balance sheet is instrumental in understanding the business’s financial position.  This particular financial report is a snapshot of a moment in time.  It can change dramatically in a minute so understanding the perspective of the [...]

Depreciation – This is Weird Accounting

12/11/2012

In the world of accounting, there are two types of expenses on the reports widely misunderstood.  They are depreciation and amortization.  I will try to help the novice gain an understanding of depreciation in this article.  So if you can, clear [...]

Local Revenue Tax – The Business License

12/04/2012

A business license is the tool used by local governments to monitor all businesses in their community.  It triggers at least two types of tax.  At a minimum a revenue and personal property tax is charged through this registration process. [...]