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Depreciation is like spreading out the cost of something valuable, like a machine or a building, over the time you use it. The Double Declining Balance (DDB) method is a way to do this faster. It means you take a bigger chunk of the cost at the beginning, which can help show the true value
Read moreJournal entries (JEs), the foundation of all accounting processes, are used for accurately recording every financial transaction in the account books. Knowing how they work is key in maintaining accurate and reliable financial records, which you need for both decision-making and regulatory compliance. This guide is also related to our articles on understanding journal entries
Read moreDepreciation lets you spread the cost of assets out over the time they’re being used, and affects both your business’s financial health and tax reporting. In this comprehensive guide, we’ll get into different depreciation methods, providing step-by-step examples to help you understand and implement each one effectively. This guide is also related to our articles
Read moreThis article will explain what contra revenue is, how to record it accurately, and some effective management strategies. We’ll also touch on related topics like gross vs. net profit, prepaid expenses, and unearned revenue. This guide is also related to our articles on understanding gross vs. net profit, understanding prepaid expenses, and understanding unearned revenue.
Read moreUnderstanding debits and credits helps you keep track of every money move in two ways: one account gets debited and another gets credited. This helps you catch mistakes, keep your financial records straight, and understand where your money is going. This guide will help you understand the basics of debits and credits, which accounts a
Read moreThe Profit and Loss (P&L) is one of the most well-known and important financial statements. It details your revenues, costs, and expenses during a specific period, showing your net profit or loss. The article will explain how to interpret various sections of a P&L statement and what these figures mean for your business. This guide
Read moreWhat is the current ratio? It’s simply your company’s current assets divided by its current liabilities. Why does this matter, you might be wondering? Well, we are going to go into that now: why knowing your current ratio is crucial and how being knowledgeable about it can help you manage your business finances more effectively.
Read moreBuying another company can help small business owners grow quickly, reach new customers, and improve how they operate. However, it also brings challenges like financial pressure, difficulties in combining the two businesses, and differences in workplace culture. It’s important to understand how to buy a business to handle these issues well and this article can
Read moreIntroduction CFO (Chief Financial Officer) reports are in-depth reports that show a variety of trends, metrics, and ratios that forecast and explain the financial performance of a company. This guide explains some of the basic CFO reports that a small business owner would use to understand their financial performance. This guide is also related to
Read moreIntroduction Cash flow and revenue can appear similar, but they’re quite different. Revenue represents the total income earned, cash flow measures the net amount of cash being transferred in and out of a business. This guide should help you understand the differences. It’s also related to our articles on understanding gross vs. net profit, operating
Read moreIntroduction Amortization, in financial and accounting terms, involves spreading payments over multiple periods for loans or allocating the cost of intangible assets over their useful lives. This article will explain the basic terms and show calculations and examples of different kinds of amortization. This guide is also related to our articles on understanding journal entries
Read moreIntroduction A price increase letter is a note a business sends to its customers to tell them the prices of products or services are going up. It explains why the business needs to charge more because of changes inside the company or in the wider market. This guide explains why you should review prices regularly,
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