Erica Sporer

Preparing Financial Statements – Three Major Financial Statements n accounting, there are dozens upon dozens of reports you can create to learn specific information. To get a clear, big-picture view of your company’s financial position, though, you need three very special reports. These three reports are the balance sheet, the statement of profit and loss, … Read more

The End of Period Cleanup – Closing the Books At the end of every official accounting period (as determined by you), you will close out the books so you can start the new period with a clean slate. Every temporary account will be closed out into the equity account(s). The income statement accounts, both revenues … Read more

The End of Period Cleanup – Prelude to Financial Statements Once you’re sure that your numbers are good, it’s time to create your financial statements for the period. You have to do this before you close out the books for the period, since that final step effectively erases your temporary accounts, all of which show … Read more

The End of Period Cleanup – Accounting for Accruals When you make an adjusting entry to account for something that hasn’t happened yet, but will, that entry is called an accrual. Accruals, as you might guess, are critical parts of accrual basis accounting, the system that strives to record transactions in the period they most … Read more

The End of Period Cleanup – Making Adjusting Entries Sometimes transactions take place in one period but impact another. Other times, you know a transaction will be finalized in the future, but at least some part of it has ties to the current period. These two situations are the main reason for adjusting entries, which … Read more

The End of Period Cleanup – The Working Trial Balance A working trial balance is like a supercharged version of the regular report. It starts with the three-and-a-half standard columns that you find on your standard trial balance: account number (the half), account name, debit balance, credit balance. Then it adds on a couple of … Read more

The End of Period Cleanup – Accounting Periods In accounting, financial results are measured by periods. Some periods are set by outside authorities, such as the bank that gave you your business loan, or the IRS. Some are set solely at your discretion, so you can have as many periods as you want as long … Read more

Controlling Purchase Costs – Recording Accounts Payable Transactions When you have accounts payable transactions, you have inventory purchases. Companies that have inventory use the accrual accounting method. So, if you have accounts payable, your company uses the accrual method. That makes things a little easier, because there’s only one way to do things: you record … Read more

Controlling Purchase Costs – Review Their Invoices When you receive an invoice from a vendor, verify it immediately. It’s not uncommon to find mistakes on invoices. Typically, you’ll have at least two other documents to compare with your invoice: your original purchase order and the product packing slip. Make sure every number on the source … Read more

Controlling Purchase Costs – Dealing with Purchase Problems Like most areas of business, purchases aren’t completely problem-free; in fact, there are lots of different ways that troubles can arise. Orders may be filled incorrectly or incompletely, merchandise may be damaged while it’s being transported, products may be of lower quality than expected (particularly when dealing … Read more