Archive for the ‘Accounting’ Category

What Is Accounting Anyway?

Anyone who’s worked in an office at some point or another has had to go to accounting. They’re the people who pay and send out the bills that keep the business running. They do a lot more than that, though. Sometimes referred to as “bean counters” they also keep their eye on profits, costs and losses. Unless you’re running your own business and acting as your own accountant, you’d have no way of knowing just how profitable – or not – your business is without some form of accounting.

No matter what business you’re in, even if all you do is balance a checkbook, that’s still accounting. It’s part of even a kid’s life. Saving an allowance, spending it all at once – these are accounting principles.

What are some other businesses where accounting is critical? Well, farmers need to follow careful accounting procedures. Many of them run their farms year to year by taking loans to plant the crops. If it’s a good year, a profitable one, then they can pay off their loan; if not, they might have to carry the loan over, and accrue more interest charges.

Every business and every individual needs to have some kind of accounting system in their lives. Otherwise, the finances can get away from them, they don’t know what they’ve spent, or whether they can expect a profit or a loss from their business. Staying on top of accounting, whether it’s for a multi-billion dollar business or for a personal checking account is a necessary activity on a daily basis if you’re smart. Not doing so can mean anything from a bounced check or posting a loss to a company’s shareholders. Both scenarios can be equally devastating.

Accounting is basically information, and this information is published periodically in business as a profit and loss statement, or an income statement.

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Filed under Accounting : Comments (2) : Nov 19th, 2008

Credit Report Erased – Is It Possible?

Getting your credit report erased is actually impossible. While you can have individual derogatory items erased from your credit report, you cannot get your whole credit report erased. Here is how to clean up your credit. When you begin the task of getting derogatory information on your credit report erased, the first thing you will need to get is a copy of your three credit reports. Before you can have errors erased, you first need to know if there are any, and if so… what the errors are.

Getting your report is easy–the three major credit reporting bureaus, Experian, Equifax, and Transunion–are required by law to give you one free copy of your credit report each year. To order, visit Annual Credit Report online or phone 1-877-322-8228. You can also mail your request to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Do not contact the three nationwide consumer reporting companies individually. They are providing the free annual credit reports only through Annual Credit Report.

Examine It Carefully

Once you have your report in hand, examine it carefully. Make a note of any charge you do not recognize. Also make note of any debt that was paid off but is still showing on your credit report.

The Process

The process for getting derogatory information on your credit report erased, is to send a letter to the credit bureau for each item you are disputing. If you know an item has been paid in full, send documentation of the payoff along with your letter. All communications with the credit bureau should be sent via certified mail. Be sure to check the box marked “return receipt requested” so you will have proof it was delivered and accepted.

If you do not have documentation, you can still get information in your credit report erased. As long as you notify the credit bureau in writing which items you are disputing, the credit bureau must contact the creditor, and request verification. The creditor has thirty days to notify the credit bureau that either the item in dispute is accurate as reported, or that it is not accurate.

Be vigilant in getting derogatory information in your credit report erased. In this day and age, your credit score has a huge effect on your life. Your credit score affects where you live, where you work, the kind of car you drive, and numerous other aspects of your life.

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Filed under Accounting, Budgeting, Credit Card Debt, Credit Cards : Comments (0) : Jun 30th, 2008

How to Analyze a Financial Statement

It’s obvious financial statement have a lot of numbers in them and at first glance it can seem unwieldy to read and understand. One way to interpret a financial report is to compute ratios, which means, divide a particular number in the financial report by another. Financial statement ratios are also useful because they enable the reader to compare a business’s current performance with its past performance or with another business’s performance, regardless of whether sales revenue or net income was bigger or smaller for the other years or the other business. In order words, using ratios can cancel out difference in company sizes.

There aren’t many ratios in financial reports. Publicly owned businesses are required to report just one ratio (earnings per share, or EPS) and privately-owned businesses generally don’t report any ratios. Generally accepted accounting principles (GAAP) don’t require that any ratios be reported, except EPS for publicly owned companies.

Ratios don’t provide definitive answers, however. They’re useful indicators, but aren’t the only factor in gauging the profitability and effectiveness of a company.

One ratio that’s a useful indicator of a company’s profitability is the gross margin ratio. This is the gross margin divided by the sales revenue. Businesses don’t discose margin information in their external financial reports. This information is considered to be proprietary in nature and is kept confidential to shield it from competitors.

The profit ratio is very important in analyzing the bottom-line of a company. It indicates how much net income was earned on each $100 of sales revenue. A profit ratio of 5 to 10 percent is common in most industries, although some highly price-competitive industries, such as retailers or grocery stores will show profit ratios of only 1 to 2 percent.

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Filed under Accounting, Budgeting, Business, Financial Statement : Comments (1) : Jun 10th, 2008

What’s the Difference Between Private and Public Company Reporting

A public corporation is a business whose securities are traded on the public stock exchanges, such as the New York Stock Exchange and Nasdaq. A private company is held solely by its owners and is not traded publicly. When the shareholders of a private business receive the periodical financial reports, they are entitled to assume that the company’s financial statements and footnotes are prepared in accordance with GAAP. Otherwise the president of chief officer of the business should clearly warn the shareholders that GAAP have not been followed in one or more respects. The content of a private business’s annual financial report is often minimal. It includes the three primary financial statements – the balance sheet, income statement and statement of cash flows. There’s generally no letter from the chief executive, no photographs, no charts.

In contrast, the annual report of a publicly traded company has more bells and whistles to it. There are also more requirements for reporting. These include the management discussion and analysis (MD&A) section that presents the top managers’ interpretation and analysis of the business’s profit performance and other important financial developments over the year.

Another section required for public companies is the earnings per share (EPS). This is the only ratio that a public business is required to report, although most public companies report a few others as well. A three-year comparative income statement is also required.

Many publicly owned businesses make their required filings with the SEC, but they present very different annual financial reports to their stockholders. A large number of public companies include only condensed financial information rather than comprehensive financial statements. They will generally refer the reader to a more detailed SEC financial report for more specifics.

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Filed under Accounting, Company Reporting, Corporation, Investing and financing : Comments (0) : Jun 1st, 2008

Promoting Your Site On The Web

I get a usefull information today about business online management. I’ll tell it for all of you here. Did you know that each cell site on cells or base station can generally handle up to four different tenants wireless? If you already have a cell site or seek to add to your property, the more you have any tenants, the most profitable wireless your lease. But without a means of research and contact the major carriers or site acquisition specialists, it can be an arduous task. You will need cell tower leases services. They will market your cell site to other tenants or promote other properties.

When you join the cell tower leases services, they will include information about your property online in their database site, which is promoted by all major wireless carriers and more than a thousand site acquisitions specialists from across the country. To help achieve these key people, they also send packages targeted marketing. It is another way they can improve your results in search engine.

So, if you want to exist in your online business, you need a right consultant in tenant wireles and promotion. They will help you more and more. There are too many cell tower leases provider on the web. Just find it by browse use the keyword: “tenant wireless consultant” as an example.

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Filed under Accounting, Business, Corporation : Comments (0) : May 30th, 2008

About GAAP

While many businesses assume that accountants are bound by generally accepted accounting practices and that these are inviolate, nothing could be further from the truth. Everything is subject to interpretation, and GAAP is no different. For one thing, GAAP themselves permit alternative accounting methods to be used for certain expenses and for revenue in certain specialized types of businesses. For another, GAAP methods require that decisions be made about the timing for recording revenue and expenses, or they require that key factors be quantified. Deciding on the timing of revenue and expenses and putting definite values on these factors require judgments, estimates and interpretations.

The mission of GAAP over the years has been to standardize accounting methods in order to bring about uniformity across all businesses. But alternative methods are still permitted for certain basic business expenses. No tests are required to determine whether one method is more preferable than another. A business is free to select whichever method it wants. But it must choose which cost of good sold expense method to use and which depreciation expense method to use.

For other expenses and for sales revenue, one general accounting method has been established; there are no alternative methods. However, a business has a fair amount of latitude in actually implementing the methods. One business applies the accounting methods in a conservative manner, and another business applies the methods in a more liberal manner. The end result is more diversity between businesses in their profit measure and financial statements than one might expect, considering that GAAP have been evolving since 1930.

The pronouncement on GAAP prepared by the Financial Accounting Standards Board (FASB) is now more than 1000 pages long. And that doesn’t even include the rules and regulations issued by the federal regulatory agency that jurisdiction over the financial reporting and accounting methods of publicly owned businesses – the Securities and Exchange Commission (SEC).

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Filed under Accounting : Comments (0) : May 20th, 2008

What are Other Ratios Used in Financial Reporting

The dividend yield ratio tells investors how much cash income they’re receiving on their stock investment in a business. This is calculated by dividing the annual cash dividend per share by the current market price of the stock. This can be compared with the interest rate on high-grade debt securities that pay interest, such as Treasure bonds and Treasury notes, which are the safest.

Book value per share is calculated by dividing total owners’ equity by the total number of stock shares that are outstanding. While EPS is more important to determine the market value of a stock, book value per share is the measure of the recorded value of the company’s assets less its liabilities, the net assets backing up the business’s stock shares. It’s possible that the market value of a stock could be less than the book value per share.

The return on equity (ROE) ratio tells how much profit a bus8iness earned in comparison to the book value of its stockholders’ equity. This ratio is especially useful for privately owned businesses, which have no way of determining the current value of owners’ equity. ROE is also calculated for public corporations, but it plays a secondary role to other ratios. ROE is calculated by dividing net income by owners’ equity.

The current ratio is a measure of a business’s short-term solvency, in other words, its ability to pay it liabilities that come due in the near future. This ratio is a rough indicator of whether cash on hand plus the cash to be collected from accounts receivable and from selling inventory will be enough to pay off the liabilities that will come due in the next period. It is calculated by dividing the current assets by the current liabilities. Businesses are expected to maintain a minimum 2:1 current ratio, which means its current assets should be twice its current liabilities.

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Filed under Accounting, Business, Financial Reporting, Investing and financing : Comments (0) : Apr 29th, 2008

Revenue and Receivables

In most businesses, what drives the balance sheet are sales and expenses. In other words, they cause the assets and liabilities in a business. One of the more complicated accounting items are the accounts receivable. As a hypothetical situation, imagine a business that offers all its customers a 30-day credit period, which is fairly common in transactions between businesses, (not transactions between a business and individual consumers).

An accounts receivable asset shows how much money customers who bought products on credit still owe the business. It’s a promise of case that the business will receive. Basically, accounts receivable is the amount of uncollected sales revenue at the end of the accounting period. Cash does not increase until the business actually collects this money from its business customers. However, the amount of money in accounts receivable is included in the total sales revenue for that same period. The business did make the sales, even if it hasn’t acquired all the money from the sales yet. Sales revenue, then isn’t equal to the amount of cash that the business accumulated.

To get actual cash flow, the accountant must subtract the amount of credit sales not collected from the sales revenue in cash. Then add in the amount of cash that was collected for the credit sales that were made in the preceding reporting period. If the amount of credit sales a business made during the reporting period is greater than what was collected from customers, then the accounts receivable account increased over the period and the business has to subtract from net income that difference.

If the amount they collected during the reporting period is greater than the credit sales made, then the accounts receivable decreased over the reporting period, and the accountant needs to add to net income that difference between the receivables at the beginning of the reporting period and the receivables at the end of the same period.

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Filed under Accounting, Business, Revenue and Receivables : Comments (0) : Apr 27th, 2008