Tag: Equity
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Bookkeeping – Controls in Accounting (Lesson 95)
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.
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Debt or Equity in Small Business – Fundamentals
Small business books and manuals explain the formula used to determine whether additional debt increases the return for investors commonly known as return on investment (ROI).
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Bookkeeping – Various Terms (Lesson 26)
In the previous 25 lessons I covered a lot of different terms and this lesson is merely a summary of the various terms a bookkeeper encounters.
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Bookkeeping – The Accounting Equation (Lesson 24)
The accounting equation is a simple formula used frequently in business. The formula is: Assets = Liabilities plus Equity OR Equity = Assets minus Liabilities.
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Treasury Stock – Fundamentals of Stock
Those corporations doing well and flush with cash sometimes buy back stock from their investors. Once purchased back by the company, the stock is called treasury stock.
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Bookkeeping – Account Types (Lesson 1)
To fully grasp the concept of accounting a bookkeeper must accept that there are six (6) different types of accounts. All the reports, ledgers, journals and entries revolve around these six types of accounts.
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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.
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Cross Purchase Agreements – Business Issues
To prevent an uncomfortable and embarrassing separation, the owners should agree on how to separate before joining together. Very similar to a prenuptial in marriage, a ‘Cross Purchase Agreement’ identifies the various business issues to address such as valuation of the ownership position, the respective form of purchasing the departing ownership and time period of payout.
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Negative Basis in Business – Tax Shelters
Negative basis in business refers to the value of the equity investment in the company. It literally means you have no actual equity investment and worse you owe somebody money because other parties have fronted the necessary capital to make the business viable.
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Retained Earnings – How it Works
In the equity section of the balance sheet there is an account that tallies the lifetime earnings net of dividends for the company. This account is referred to as the Retained Earnings of the business.