Tag: How to Read a Balance Sheet – Equity Section
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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.
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Three Primary Characteristics of Successful Businesses
Over the last 27 years of working in the world of accounting, I have become convinced that to be successful in business, you must have three primary characteristics. It is the common thread that binds all successful operations in every industry I have witnessed.
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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.
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Capital Account – Business Partnerships and Limited Liability Companies
A ‘Capital Account’ is a term used in partnership and in limited liability company business formats. It refers to the individual balances in the equity section of the balance sheet. The basic formula for value is beginning balance plus contributed capital plus earnings from the current accounting period less any withdrawals
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What is Accrual Accounting?
Accrual accounting is the preferred method of accounting for all business operations. Any publicly traded company must comply with the principles of accrual accounting. Small business operations can choose between cash and accrual accounting for their records. Although cash accounting is the easiest to work with as a small business operation, accrual accounting will provide a more…