Month: February 2014

Fixed Costs – Explanation and Examples

‘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 best example is rent for a company.  It doesn’t matter whether you produce or sell …

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Lease or Buy

Fixed assets are normal in business operations.  However, financing those assets is the critical issue.  If you buy the asset outright, you tie up capital that can be used to expand operations or keep overall costs low in operating the company.  You can buy the asset paying a down payment and borrowing funds from a …

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The Federal Reserve System

No other federal government creation is more misunderstood than the Federal Reserve System.  The Federal Reserve’s primary purpose is to act as the central banking system for the United States.  Formed in 1913, the Federal Reserve was tasked by Congress with three primary functions.  One – maximize employment in the United States.  Two – stabilize …

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Insolvency and Bankruptcy – Know the Difference

Every business owner needs to know the difference between insolvency and bankruptcy.  Often these two terms are misunderstood and improperly used in conversation.  You need to know their correct meaning because both are used in civil law and both have different issues to address during the process.  In addition, understanding these two terms builds a …

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