Accounting’s primary principle is the measurement of economic activity. The American Institute of Certified Public Accountants provide the concepts and principles in measuring economic activity and how those financial transactions are recorded.
Job costing reports are management tools used to evaluate project or production performance against a known or estimated standard. They are used in many business sectors and their respective industries. The primary purpose of job costing reports is to identify discrepancies or beneficial results, usually in the form of financial values. They can be used to report both financial and numerical production outcomes.
Liquidity ratios are a group of ratios used to measure the ability of a business operation to meets its current obligations. Liquidity ratios are similar to the initial medical tests a patient receives at a doctor’s visit. Doctors take blood pressure, temperature, and pulse rate. The doctor wants assurance that the primary indicators of health are good. Liquidity ratios are exactly the same. The user wants to know that the basic measurements of a business indicate good health today.
Purchase orders are requests to a seller to provide a certain product or service. Purchase orders are a business tool to control both physical and financial outcomes related to operational activities. For publicly traded entities, they are required as a function of internal controls to minimize defalcations.
Accounting is the process of recording economic activity and organizing this information in a format to inform owners about financial results. It all begins with the journals and ledgers. The initial entry is recorded in one of many journals and then transferred to the respective ledgers where the data is summed and reported to the …
Class accounting is one of the options available with QuickBooks software. Most accountants and bookkeepers misunderstand its purpose and how to properly implement this wonder tool of accounting. If you are considering using class accounting and want to have a full comprehensive understanding, this is the article for you.
Insolvency refers to the ability to pay bills in a timely manner. It does not mean bankruptcy but long-term insolvency is a underlying factor of bankruptcy. Many owners and/or managers of small business have no idea of how to determine if the company is insolvent or headed towards the inability to meet their day to day obligations.
Pooling of costs is an accounting trick used to facilitate better matching of costs against the respective revenue stream or predicted cost for the respective product or function.
At the peak of the hierarchy of internal controls sits policies. Policies are written by the highest echelon of management for a company, its Board of Directors or Trustees. The upper tier and mid level management of a business develop procedures to carry out the policies of the company.
Item codes are broken out into two distinct types: Sales (Revenue) and Cost Codes. The primary purpose is group values and units together in an account for evaluation purposes.
Just as manufacturing uses controls to ensure quality of product, controls are used in accounting to generate accurate information, maintain security over assets and comply with Generally Accepted Accounting Standards. The company implements various controls to assure accurate and timely information.
