Bank charges are thus service charges and fees deducted for the bank’s processing of the business’ checking account activity. This can also include monthly charges or charges from overdrawing your account. If you have earned any interest on your bank account balance, but they must be added to the cash account. You receive a bank […]
For example, if a company makes all of its sales by extending credit to customers, it will have generated revenues but not cash flows from customers. It is only when the company collects cash from customers that it has a cash flow. Greg didn’t invest any additional money in the business, take out a new […]
Money is flowing out of your business, and in exchange, you’re gaining new equipment. The average small business shouldn’t have to exceed this limit if it sets up its accounts efficiently. Can I make my own chart of accounts? To make a chart of accounts, you’ll need to first create account categories relevant to your […]
Encumbrance accounting sets aside specific assets to pay anticipated liabilities. For example, a company may reserve a sum of cash to settle up its accounts payable. The presence of an encumbrance can give the illusion that there are more available funds inside an account than what is actually free for use. The money that has […]
The key point (break-even point) is the intersection of the total cost line and the total income line . A vertical line down from this point shows the level of production necessary to cover all costs. You need to be sure to understand your break-even point, and be able to make data-driven decision so your […]
Cash and cash equivalents are recorded on the balance sheet as a current asset. Its value changes each time that the business either receives or spends cash and cash equivalents. Such changes are called cash flows and are described in transactions recorded on the accounting ledger. Which type of asset is gold? Gold and silver […]