When a company extends credit to customers, inevitability some portion of those receivables will turn into bad debt. As a result, an entry must be prepared to adjust the balance sheet and income statement. Preparing and posting a bad debt journal entry is typically done during month-end close. What is Bad Debt? Accounts receivable that …
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When preparing financial statements, a trial balance is used as part of the closing process to develop the balance sheet, income statement and statement of cash flows. After an adjusted trial balance is prepared, a post closing trial balance is used to verify the accuracy of the closing process. This type of trial balance is …
When recording journal entries for cost of goods sold, accountants work in tandem with manufacturing or operations, to ensure they’re booking the correct costs. Support from production personnel is essential to back-up journal entries and remain compliant with U.S. GAAP. These points and those below are part of the inventory cost recordation process. What is …
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Depreciation accounting can seem a bit overwhelming, but once you learn a little bit about why depreciation is necessary and how depreciation formulas work, you’ll see it’s fairly straightforward and easy to understand. Of course, there are some intricacies and it can be a bit more complex depending on the type of business you are …
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The Heart of Every Small Business Doing a cash flow analysis for a small business can make a huge difference when it comes to determining whether or not your business is on the right track. The objective in any business is to make a profit but you can’t really be sure you’re actually doing that …