Starting a business should be an exciting time. As long as you are properly prepared, you can increase your chances of success significantly and reduce the many stresses of entrepreneurship. Once you have that revolutionary idea, it is critical to look ahead to your short-term and long-term financial future. Before you do anything else, make …
The accounting cycle is a process that bookkeepers, accountants, and businesses use to prepare financial statements. It’s a systematic and disciplined approach that ensures the consistency and accuracy of financial reporting. Below are components of the accounting cycle and the relevance to business stakeholders. Accounting Cycle Defined The process of identifying relevant transactions and economic events, …
A percentage of accounts receivable will become an uncollectible amount of cash for many reasons, requiring a periodic write-off of receivables at the end of the year. Whether the allowance method or allowance account, such as the allowance for doubtful accounts or the direct write-off method, are used, the expense of an uncollectible account must be recorded as …
When a company borrows money, they must pay interest and record the interest payable or expense accurately to reflect borrowing costs. Calculating interest expense can be straightforward if the note payable has a stated interest rate or coupon. However, the process can become difficult to account for, given the nature of the debt instrument and …
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