Erica Sporer Recording Your Revenues – Selling on Account When you extend credit to your customers, there will be a lag between the time of the sale and the time you get paid. Credit sales by nature allow customers to buy now and pay later. That can help you increase your sales, particularly with commercial customers. Although … Read more
Recording Your Revenues – Simple Cash Sales Cash sales are simpler to record than credit sales in two very important ways. First, you don’t have to bother recording the transaction in a customer’s account on top of the general account. Second, there’s no second step to the transaction; with credit sales, you have a second … Read more
Recording Your Revenues – Develop a Sales Journal When your company has a high sales volume, creating a separate sales journal can cut down on your bookkeeping time substantially. High sales volume is relative, but a good rule when you’re first starting out is at least ten sales transactions per day. Once you hit that … Read more
Recording Your Revenues – The Basics of Sales Transactions There is one thing all sales transactions have in common: a credit entry to the sales account. The rest depends on the particular circumstances sur- rounding the transaction, and there can be a lot of variation in those circumstances. ALERT! Remember, companies with inventory generally must … Read more
Recording Your Revenues – What Are You Selling? When it comes to recording your revenues, what your company sells plays a big part in how transactions are written up. There are basically three things you can sell: products, services, or a combination product and service. The main transaction differences are with cost of goods sold … Read more
The Accounting Equation – Assets Equal Liabilities Plus Equity This equation, which is at the very core of accounting, expresses one of the biggest accounting basics: everything must remain in balance. Changes in one side of the equation require changes in the other. The form of this equation comes from the basic idea that assets … Read more
The Accounting Equation – Equity Means Ownership When you first start a business, you (along with any co-owners) put some of your own assets into the company. Those original contributions form the first entries in your equity account and get your business on its way. Adding resources into the company is one way to beef … Read more
The Accounting Equation – Liabilities Are What Your Company Owes Most businesses owe something to someone. Whether you take out a bank loan to start the company, use a company credit card to pay for expenses, or buy your inventory from vendors on account, your company will show liabilities on the balance sheet. Even if … Read more
The Accounting Equation – A Closer Look at Fixed Assets Fixed assets take more work than other assets, from both a real-life maintenance perspective and from the accounting viewpoint. The more substantial fixed assets, from vehicles to factories, can require a lot of planning, drawn-out purchase arrangements, and the burden of long-term liabilities to go … Read more
The Accounting Equation – Breaking Out Asset Categories The accounting way to separate assets into categories uses liquidity as the measure. Anything that is expected to be converted to cash within one year of your balance sheet date is considered a current asset; all others are plunked down into one of the long-term categories. Long-term … Read more
