The balance sheet compares the assets of the company against the sources of those assets. Sources include borrowing money to earning the money. Learn about the different classes of assets, liabilities, and the owner’s equity.
The Open Job Cost Status Report identifies a project's actual costs of construction, amounts borrowed or financed, and any customer payments made to date. The net result is the contractor's net investment into the respective project.
All the lessons to date lead into this one long and arduous task with bookkeeping called ‘Closing the Books’. Closing of the accounting records is performed at the end of interim and fiscal year periods. The end of the year process is more involved than interim periods; but the procedure is the same. The closing...
The balance sheet serves as an historical report. It identifies the accumulated change in value since inception. The balance sheet is organized into two halves and both sides must be equal in value. In addition, the balance sheet is a snapshot of the financial condition at a single moment in time along …
Bookkeeping – Proper Balance Sheet Presentation (Lesson 20) Read More »
In the last 12 lessons I introduced debits and credits for the six types of accounts. In addition I explained the financial statement relationship between the balance sheet and the income statement (profit and loss). In Lesson 12 I addressed contra accounts. In the examples used with contra accounts I illustrated how the contra amount …
Bookkeeping – Debits and Credits with Parenthesis on the Balance Sheet (Lesson 13) Read More »
The equity section of the balance sheet identifies the approximate dollar value of net worth accrued to the owners/investors. Equity type accounts can have both credit and debit balances. By far the most preferred is a credit value. Debit values does not mean that something is wrong, actually it can be a great sign of …
Bookkeeping – Debits and Credits in Equity Accounts (Lesson 10) Read More »
Before I can explain the debits and credits related to the equity types of accounts I have to make sure you understand the relationship between the financial statements. Specifically the relationship between the income statement and the balance sheet. In accounting there are four financial reports plus a set of notes typically included in the …
Bookkeeping – Financial Statement Relationships (Lesson 9) Read More »
In the simple lever and fulcrum machine the force is magnified onto a load. The machine creates a mechanical advantage, a form of force amplification. In business the principle is exactly the same. Except here we are not moving a physical object but the objective is to amplify the profitability or financial gain by using …
Internal controls is an accounting system to aid in proper reporting of existing assets and liabilities. Internal controls over fixed assets alleviate two distinct risks. The primary risk is physical in nature and relates to the asset getting lost, stolen or damaged thereby affecting the value as reported on the financial statements. The second risk...
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 publically …
Construction accounting uses job cost reports to inform management of progress and existing issues with projects. There are several different sets of reports. The balance sheet set functions as an overall financial picture for the company. The balance sheet set informs us of four overall monetary pieces of information: It basically identifies how much is...
