Tag: Depreciation
-
Bookkeeping – Estimating Depreciation (Lesson 83)
Depreciation is a form of an allowance for the wear and tear (exhaustion) of property used in a trade or a commercial enterprise. The idea is to match as well as possible the actual use (utility) of the asset to its change or reduction in fair market value due to that utility.
-
Bookkeeping – Estimates (Lesson 82)
There are many transactions in accounting requiring the accountant to use estimates for the respective debits and credits. The following five lessons cover how estimating is performed with depreciation, payroll benefits, bad debts, warranties and extraordinary items. This lesson explains why estimating is needed and used in business.
-
Bookkeeping – Recurring Entries (Lesson 65)
Every day bills arrive from vendors that are mere repetition like the electric or phone bill. They basically recur every so often (mostly monthly).
-
Cash Flow From Operations – Basic Formula
In a pure cash only operation, the profit as reported on the income statement would also be cash flow from operations. But modern-day business is not pure in how it is conducted. Companies agree to pay suppliers at a later time, payroll is weekly or monthly, benefits that are paid in the future are offered to…
-
Bookkeeping – Amortization (Lesson 53)
Amortization is similar to depreciation whereby an asset’s cost is allocated to the expense over time. There are several differences with amortization. Amortization is used with intangible assets and the method is almost always straight line.
-
Bookkeeping – Book and Tax Depreciation (Lesson 52)
One of the differences between book income and taxable income is depreciation. In general Section 168 of the Internal Revenue Code allows businesses to accelerate their depreciation for tax purposes.
-
Bookkeeping – Depreciation Schedules (Lesson 51)
When a small business purchases fixed assets two financially based opposing forces come into play. The first is the financial reporting desire to present information in a fair manner so management can make good financial decisions. The opposing force has to do with taxation.
-
Bookkeeping – Introduction to Depreciation (Lesson 50)
Depreciation is the process of allocating the initial capital outlay for fixed asset purchases over time to the income statement. The basic principle with depreciation is that any fixed asset has a predetermined lifetime based on time, usage or fair market value.
-
EBITDA
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. The value is generally known as operational profit before capital expenditures and tax obligations.
-
Bookkeeping – Schedules (Lesson 23)
In accounting there are books (journals) and ledgers for source entry of information. A trial balance is used to monitor the types of accounts. With the use of parent-child accounts and control accounts bookkeepers can generate a wide array of reports. Unfortunately this still lacks the breath of supporting information needed. The profession uses schedules to augment the reports.