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
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
