Equity is the difference between assets and liabilities as shown on a balance sheet. In other words, equity represents the portion of assets that are fully owned by the owners (stockholders, partners, or proprietor) of a business. When I prepare financial statements, I always review the general ledger (GL) account numbers that the client has [...]
Category Archives: Accounting Concepts
Equity Accounts – It’s Your Money
01-Oct-07You read about this in every newspaper in every town in the entire country: Some bookkeeper, trusted by the owner of a small business, embezzles thousands of dollars. If the theft doesn’t put owner out of business, it certainly causes a major headache. The reason we hear of these cases so often is that, in [...]
All my life I had heard the warning never to buy a “pig-in-a-poke”. I understood the gist of it but didn’t really know what a “poke” was. So I looked it up one day and found out a “poke” was a “bag”. The saying refers to a scam in the late Middle Ages, at a [...]
Loans vs. Leases: What’s it all about?
16-Aug-05One of the most frequent questions I get asked is “Shall I lease or buy?” Most likely the lease vs. buy choice for a business would arise when considering the acquisition of a company automobile or delivery truck, but it could be any expensive piece of equipment. This decision is usually predicated by the desire [...]
Detail of the General Ledger Report
04-Jan-05The Detail of the General Ledger Report: Your most valuable analytic tool How in the world could anyone working in accounting get along without a Detail of the General Ledger report? That would be like working with your hands tied and your eyes blindfolded. Without this report you would have a very difficult time determining [...]
Understanding ‘The Bottom Line’
15-Nov-04What’s there to understand? The bottom line is the last line on the Profit & Loss (P&L) statement and it is either a profit or a loss. That’s all you need to know, isn’t it? Yes, it is important to know whether you are making a profit or losing money, but understanding how financial statements [...]
