For example, George approaches his employer, Ben, for a payroll advance. George and Ben are good friends outside of work, so Ben agrees to an advance of $700, even though company policy states that advances top out at $500.... Read more
The journal entry puts the van on the books by increasing the balance in the asset account. It reduces the balance in the cash account with a credit for the same amount. Double-entry accounting is the foundation of financial management at most busine... Read more
The best way to understand how it works is to use your own numbers and try building the schedule yourself. The most common types of depreciation methods include straight-line, double declining balance, units of production, and sum of years digits. Ca... Read more
You may feel more at ease with face time with a partner in a smaller firm. Be aware that large firms sometimes contract out work to smaller accounting firms -- so make sure you ask who will be handling your account. An accounting firm will offer an h... Read more
On the income statements of publicly traded companies, an item called investment income or losses is commonly listed. This is where the company reports the portion of its net income obtained through investments made with surplus cash instead of being... Read more
The board of directors of a corporation possesses sole power to declare dividends. The legality of a dividend generally depends on the amount of retained earnings available for dividends—not on the net income of any one period. Firms can pay dividend... Read more
A company that lacks sufficient cash for a cash dividend may declare a stock dividend to satisfy its shareholders. Note that in the long run it may be more beneficial to the company and the shareholders to reinvest the capital in the business rather ... Read more
For example, the statement may include line items for changes in the ending balance of accounts receivable, inventory, and accounts payable. The intent is to convert the entity’s net income derived under the accrual basis of accounting to cash ... Read more
It is an estimated expense that is scheduled rather than an explicit expense. In this lesson, we'll use a hypothetical road trip and some other real-life examples to show you how to use the Poisson distribution, a formula for calculating the probabil... Read more
The main aim of real accounts is to determine the company’s financial standing in terms of what it owns vs. what it owes. This can happen if you've never had any relevant transactions or if you sell off all the assets in a particular account. I... Read more
