T-Account defined A T-Account is a template or format shaped like a “T” that represents a particular general ledger account. Debit entries are recorded on the left side of the “T” and credit entries are recorded on the right side of the “T”. It is a tool for organizing journal entries and analyzing accounting transactions. [...]
Category Archives: Accounting Fundamentals
With interest rates as low as they are today, how can these credit card companies charge such high interest rates? To charge almost 25% in today’s market seems rather excessive, to say the least. Credit card companies are usually large financial institutions such as banks or stores. They say it is appropriate to charge high [...]
The definition of Gain and Loss is as follows: Gain: When the sales price of a fixed asset exceeds the fixed asset’s book value. Loss: When the sales price of a fixed asset is lower than the fixed asset’s book value. How would you feel if you sold one of your fixed assets in your [...]
One of the great things about the discipline of accounting is that there is always a tidy solution to an accounting problem. Well, most of the time. The reason for this is because you are done only when the books are “in balance”. You can never just throw up your hands, walk away, and leave [...]
Why Petty Cash
30-Jan-05Why Petty Cash? It is the difference between sloppy bookkeeping and managing your money properly. You have your own small business, so why not grab a twenty out of the till when you need some pocket money? It may not be the end of the world if you do, but it presupposes a certain attitude [...]
Journalizing Payroll
20-Dec-04If you are a business owner or manager, chances are you have had to deal with payroll and all of its complexities. If you haven’t dealt with payroll yet, you may have to in the future. There are many parts to payroll. First you have to learn how to calculate withholding taxes for employees and [...]
Depreciation is defined as a portion of the cost that reflects the use of a fixed asset during an accounting period. A fixed asset is an item that has a useful life of over one year. An accounting period is usually a month, quarter, six months or one year. Let’s say you bought a desk [...]
A journal is a record of transactions that shows the accounts and amounts of both the debit side and credit side of the entry. A General Journal is the primary journal or place to record transactions that do not fit into any other journal. The General Journal (GJ) serves a major purpose. In many small [...]
The bank reconciliation is defined as a process by which to compare a business entity’s book cash balance with the bank’s cash balance as of a given period so as to note any discrepancies. What person would attempt to sail across the ocean without a compass, map, and a sextant? These are traditional navigational tools [...]
As a small business owner/manager you must have an understanding of the financial end of your business. Certainly, you have a decent grasp of how the business operates, but are you able to visualize an accounting framework that your transactions fit into? To do this requires becoming familiar with how your financial statements are structured [...]
