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Bookkeeping

3 Fundamentals to Debrief the Simulation Report

For example, if a company says that the capital cost is 35 percent of its total inventory costs, and the total inventory held is $6000, then the capital cost is $2100. This risk is a component of the cost of carrying inventory. Many local authorities tax the level of inventory in the warehouse, so higher...
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What Is Accounting Transaction Analysis? Explained In Detail

Organizations like Treehouse almost always have financial assets. Assets like buildings and equipment are tangible; they have physical substance. They do not have physical substance, but they’re valuable because they represent a contractual claim. For instance, if Treehouse owns shares of Boeing stock, they have a right to the dividends and other benefits that Boeing...
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Effective Interest Rate Calculator

On a period-by-period basis, accountants regard the effective interest method as far more accurate for calculating the impact of an investment on a company’s bottom line. To obtain this increased accuracy, however, the interest rate must be recalculated every month of the accounting period; these extra calculations are a disadvantage of the effective interest rate....
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Net-Net: Definition, How It Works, Formula To Calculate

They will then use this information to determine if they should open a long or short position – which would depend on whether the net change has been positive or negative. To calculate the net change in cash, add the change in cash from operating activities, the change in cash from investing activities, and the...
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Credit Risk Definition, Types, Measurement, and Management

The two borrowers present with different credit profiles, and the lender stands to suffer a greater loss when Borrower B defaults since the latter owes a larger amount. Although there is no standard practice of calculating LGD, lenders consider an entire portfolio of loans to determine the total exposure to loss. Concentration risk is the...
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5 Tips for Effective Small-Business Bookkeeping

FreshBooks’ app requires a subscription to their accounting software, which starts at $8.50 per month for a basic edition. For most small businesses, the Spend and Certify apps will be the best fit for tracking employee expenses. Spend is a virtual card that allows you to control employee spending and auto-reconcile receipts to streamline bookkeeping....
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Sales Price Variance: Definition, Formula, Example

Thus, the company may pay less for materials than originally anticipated in the budget. This results in a favorable variance because the drop in material prices result in less costs for the manufacturer and increase its profits for the period. A company might achieve a favorable price variance by buying goods in bulk or large quantities, but...
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Common Payroll Mistakes What They Are & How to Avoid Them

You’ll want to check with your department of revenue to learn your state’s filing requirements since some have different rules. You’ll also need to submit a copy of the forms to each locality where municipal tax was withheld during the year if you’re in a state with local income taxes. Set a reminder for yourself...
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A Guide to Bookkeeping: Skills, Salaries, and Careers

Bookkeeping, as it will be discussed here, refers to simply collecting records of expenses and revenues, and then posting those transactions to a general ledger. The accrual accounting method records financial transactions when they occur rather than when cash exchanges hands. Your accounting ledger serves as the hub for all your financial information—in particular, all your...
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