Erica Sporer Standard Operating Expenses – A Look at Expense Categories One of the oldest business clichés is this: You have to spend money to make money. Expenses are the standard costs of doing business, and there’s really no way around them. On the plus side, expenses are tax deductions, and that means a lower tax bill … Read more
The Inventory-Cost Connection: Figure Out Cost of Goods Sold In order to figure out your profit or loss for a period, you need to know several key figures. One of the most crucial is the cost of goods sold; with that number, you can calculate your gross profit and begin to get down to the … Read more
The Inventory-Cost Connection: Extra Steps for Manufacturers Not only do manufacturers need extra steps to figure out their product costs; they also have to deal with three distinct types of inventory: raw materials, work in progress, and finished goods. Raw materials inventory includes any untouched building blocks that you will eventually use to create your … Read more
The Inventory-Cost Connection: Four Ways to Value Inventory There are four ways to keep track of how much your inventory is worth: Last in, first out (LIFO) First in, first out (FIFO) Average cost Specific identification The method that works best for your business depends on what type of inventory you keep. When you offer … Read more
The Inventory-Cost Connection: Set Up Your Purchases Journal To make recording inventory purchases as painless as possible, use a special purchases journal to write up these entries. Like the other special journals, the purchases journal is set up so that you don’t have to keep writing the same account names over and over again; instead, … Read more
The Inventory-Cost Connection: What Goes into Inventory Costs? The whole point of your inventory is selling it. The point of selling it is to make some money. In order to actually make a profit by selling your inventory, you have to know how much it really costs to make every item so you can set … Read more
The Inventory-Cost Connection: Inventory Transforms into Cost of Goods Whether you are a manufacturer, a wholesaler, or a retailer, you sell some kind of product. When you sell some kind of product, first you have to create or buy it. The products you have on hand, the ones that you intend to sell to your … Read more
Recording Your Revenues – When a Sale Is Not a Sale Sometimes a sale does not stay a sale. This can happen when a customer returns whatever he bought, or a trade customer asks for a special allowance on wrong or substandard merchandise. At some point, you have probably returned something to a store (or … Read more
Recording Your Revenues – Dealing with Special Sales Transactions Some sales transactions involve more than just a debit to cash or accounts receivable and a credit to sales (and maybe sales tax payable). These special transactions are handled a little differently than the standard fare. Examples include sales that involve discounts, time sales (such as … Read more
Recording Your Revenues – Collecting Sales Tax If you sell products, you probably will have to deal with sales tax. In fact, even if you provide only services to your customers, you may still have to deal with sales tax, although that’s still more the exception than the rule. Either way, sales tax tends to … Read more
