Report Analysis – How to Read the Statements

Learning to read and analyze financial statements is crucial to the success of the business. If the owner can decipher the information and make good decisions, the company will improve. But to make good decisions, the owner has to be able to understand what they are reading. This section teaches the business owner how to read financial statements.

These articles are in-depth and educational in nature. If you are looking for some quick lesson, this isn’t the site for you. It took me seven years of education and 25 years on the job to develop the necessary skills to truly understand financial statements. I can’t teach you nor anyone in 10 minutes or less. I’ve kept the information simple and easy to understand. There are lots of real life examples, illustrations and charts. If you have questions, contact me via the ‘My Services‘ page in the footer below.

FEATURE ARTICLES:

• Accelerated Depreciation – An Explanation

  
  When it comes to depreciation, no two businesses are alike. Unlike traditional straight line depreciation where the asset value is costed out to depreciation expense in equal increments over a given life expectancy, accelerated depreciation expenses the cost at higher values during the earlier accounting periods and at a lower amount towards the last half ...

• Accrued Payroll – An Explanation

  
  Accrued payroll is a current liability comprised of four sections. The first is the amount of payroll earned by staff and not yet processed or paid. The second is the dollar value of personal time off accumulated for each employee aggregated into one number. The third consists of payroll taxes owed to the respective governmental authorities and ...

• Depreciation – This is Weird Accounting

  
  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.

• Dividends and Distributions – Use in the Proper Context

  
  Dividends and distributions refer to the payment of cash to investors. Why are there two separate terms? Well, the term is tied back to the type of entity that makes the payment. Simply stated, regular corporations, i.e. C-Corporations as identified in the Internal Revenue Code use the term ‘Dividends’ and S-Corporations (Small Business Corporations) use the term ‘Distributions’. In ...

• Financial Statements for the Small Business

  
  Financial statements serve the purpose of presenting economic activity and status related to a particular date and over a particular time frame. Accountants record monetary transactions and via financial reports present the information in an easy to understand format. The financial statements for a small business do not have to comply with those of ...

• Job Costing Reports – Introduction (Part 1)

  
  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 ...

• Profit and Loss Statement Using Class Accounting

  
  Class accounting breaks down sales and the associated cost of sales into functional groups. Whether you use divisions or departments or product/service lines class accounting allows you to identify those more profitable areas of operations. This is just one of the many different financial reports used in small business.

• Returns, Allowances and Discounts in Accounting

  
  In the revenue section of every income statement (profit and loss statement) is an adjustment group to sales. This group reflects the value related to the actual sale of the product or services. This adjusting group is comprised of three significant types of adjustments to sales.

• The True Cost of Labor

  
  I laugh at the definition of labor costs because in my opinion the so called experts only have it half right. Labor costs are more than just gross wages and benefits. It should include the costs of insurance, employer taxation, human resources management and incentives. All of the costs associated with delivering the human element of ...

• The Various Forms of Depreciation

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

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