Category: Bookkeeping

It may be optionally disclosed in the notes to the financial statements. Balancing debt with business growth is equally important, and many companies will take on debt to expand, such as financing new store openings or acquiring additional operating equipment. While this can lead to increased revenue growth, excessive interest expenses can strain profits if […]

Interest is found in the income statement, but can also be calculated using a debt schedule. The schedule outlines all the major pieces of debt a company has on its balance sheet, and the balances on each period opening (as shown above). Most commonly, interest expense arises out of company borrowing money. However, another transaction […]

Respond promptly and honestly when donors ask questions about how you used their money. Make your financial policies public and explain complex financial matters in simple terms. Beyond basic financial ratios, track indicators that show your resource efficiency and program sustainability. Monitor trends in donor retention rates, program cost per beneficiary, and operating reserve levels. […]

Generally speaking, a company with a negative retained earnings balance would signal weakness because it indicates that the company has experienced losses in one or more previous years. However, it is more difficult to interpret a company with high retained earnings. When the retained earnings balance is less than zero, it is referred to as […]

Changes in appropriated retained earnings consist of increases or decreases in appropriations. Retained earnings represent the accumulated earnings from a company since its formation. Most companies lose money when they first start up, and so for a time, their retained earnings will be negative. That’s one reason why most start-ups don’t pay dividends, in addition […]

Financial transparency is financial transparency crucial for promoting accountability within organizations and institutions. When financial information is openly shared, stakeholders can assess how resources are being utilized and whether funds are being allocated effectively. This level of transparency fosters trust and encourages responsible behavior among all parties involved. Shareholders wanted more information on the company’s […]

Based on the cash flow statement, you can see how much cash different types of activities generate, then make business decisions based on your analysis of financial statements. The projected cash flow of your new business Accounting For Architects predicts the money that will come in and go out of your business in the future. […]

If you can’t get enough of learning about finance and business, head over to our resource hub! We’ve got plenty of educational material for you to browse through. If you take the current statement’s cash and cash equivalents, you can subtract the same figure from the previous period. The cash flow statement acts as a […]

This article has provided an in-depth exploration of the FIFO method, covering its principles, implementation steps, advantages, and disadvantages. Key takeaways include the method’s alignment with actual inventory flow, its financial benefits, and the potential for higher tax liabilities. Choosing the right inventory valuation method is crucial for accurate financial reporting and efficient inventory management. […]

For example, if a business sells 100 units but buys 50 units at higher prices later, LIFO applies those higher costs first, increasing the cost of goods sold and reducing taxable profits. The FIFO method assumes that your older inventory is sold first, meaning your ending inventory will contain products with a higher valuation, ultimately […]