Of all the assets in business cash is the most valuable and coveted. Keeping track of how much is available and where it goes is the responsibility of the bookkeeper. Often owners have no idea of how much they really have nor how much of the existing cash is earmarked for certain items.
Month: February 2017
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 in reading financial statements, its purpose and the many drawbacks for its use with small business.
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 actual check writing is commonly referred to as cash disbursements.
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 traditional trial balance except there are additional columns used to identify various adjustments and the corresponding source documents (work papers).
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 broader in scope and encompasses all forms of expenses too. When a company buys insurance, it is making a purchase.
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 involved with returns. If they continue to increase from one period to the next, something is amiss.