Business Principles Accounting

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.

Price to Cash Flow

Price to Cash Flow Ratio

The price to cash flow ratio is a valuation tool used to assist buyers and sellers of stock in determining timing of purchases or the disposition of shares.   Unlike the other valuation ratios, this particular ratio utilizes the cash flows statement in determining the outcome.   The formula is simple:

Price to Cash Flow = $Market Price of a Share of Stock/Cash Flow in Dollars Per Share of Stock

Activity Ratios

The majority of activity ratios measure the ability of the company to turn assets into earnings.   All businesses utilize a simple principle, buy an asset at a low price and sell it at a higher price.   Even service based businesses do this.  Labor is purchased for a certain value and then sold for a much higher price.   Retail businesses purchase inventory and then turn around, mark it up and then sell it to make a profit.   There isn’t any business out there that doesn’t exercise this basic business principle.

Job Costing Reports – Introduction (Part 1)

Job Cost Reports

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

Liquidity Ratios

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.

Class Accounting With QuickBooks

Class Accounting

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 – Detection

Insolvency

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.

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