Accounting Lessons

What is the Working Capital Turnover Ratio?

A company’s working capital and cash flow can tell you a lot about a business. The working capital turnover ratio measures how efficient a company is using its working capital in relation to a given level of sales which tells a lot about a company’s financial situation at the end of the period. In other […]

What is the Statement of Cash Flows Direct Method? | Formula & Example

What is the Statement of Cash Flows Direct Method? Cash flow refers to the amount of cash flowing in and the amount of cash flowing out of a business. These financing activities are reported on financial statements known as income statements. There are two methods that are used to report cash flow. They are the

Bad Debt Expense: What is it and How to Calculate

When a company sells products and services, it may do so by extending credit to its clients. When a company produces products or services for customers and issues invoices for payment of those products or services, it is reasonable to assume that many of those invoices will not be paid. As a result, an accounts receivable

Basic Accounting Concepts

Lesson 1 in the Basic Accounting series: Understanding basic accounting concepts is a must for every small business owner. Even if you have an accountant that takes care of that “accounting stuff”, you need to know business accounting basics such as debits and credits and some accounting terminology. Accounting is setting up a system of

Double Entry Bookkeeping

Lesson 2 in the Basic Accounting series: With a double entry bookkeeping system every one of your small business transactions will be recorded into at least two of the accounts in your accounting system. Is double entry accounting right for your small business or will another accounting system work better? Single Entry vs Double Entry

How to Record Accounting Journal Entries

Lesson 3 In The Basic Accounting Series: Learning how to record accounting journal entries is the foundation of any business accounting course. Let us show you the steps and some examples! If you are a student, small business owner, or just wanting to brush up on your accounting skills, understanding the basic accounting concepts of debits and credits and double-entry accounting will be the

How to Post to Your Accounting Ledger

Lesson 4 In The Basic Accounting Series: A general accounting ledger is a collection of your chart of accounts. It is where all of your general journal entries or financial transactions end up for the accounting period.  While spreadsheets can be used, most all accounting these days is done on with software, which makes it easier for

Understanding Financial Statements

Lesson 5 in the Basic Accounting series: Understanding financial statements are one of the keys to your small business success because the statements are a reflection of the company’s financial performance and the company’s financial health. Sadly, many entrepreneurs fail not because they lack knowledge of their products and determination… but, because they failed to

Financial Ratio Analysis

Lesson 6 in the Basic Accounting series: Financial ratios and performing a financial analysis using your financial statements can help to construct a successful small business.  Financial Ratio – Comparative Analysis Comparing your current financial statements to: previous years previous months previous quarters …can tell you how your business is doing financially and if it

How to Figure Your Break-Even Point

Lesson 7 in the Basic Accounting series: Your small business’s break-even point is the point where the total revenue equals your total costs associated with the sale of your product or service or an even simpler accounting definition is the point where your business does not have any earnings and does not make a profit or suffer