Accounting

Accounting Primer: Financial Statement Ratio Analysis

Ratio Analysis expresses the relationship between two selected accounting elements and is one technique used in conducting a financial analysis. When comparing your business’s ratios to those in for your industry standards, ask: Is there a difference between my company’s ratio and the industry average? Is it a significant difference? Is the difference good or …

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Accounting Primer: Different Income Statements for Different Business Types

Different Income Statements for Different Business Types Different types of businesses need different types of Income Statements. Here are some of the different types of business and the differences that you would expect to see in their Income Statements based on the differences in their businesses: Service Businesses: These businesses will have a section called …

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Accounting Primer: Non Current Liabilities

Non-current Liabilities Non-current liabilities are those obligations that will be payable in the following year. There are three types of non-current liabilities, only two of which are listed on the balance sheet: Non-current portion of Long-Term Debt (LTD) Notes Payable to Officers, Shareholders, or Owners Contingent Liabilities Non-current portion of long-term debt is the principal …

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An Accounting Primer: Current Liabilities Defined and Detailed

Current Liabilities Defined Current liabilities are those obligations that will mature and must be paid within 12 months. These are liabilities that can create a business’s insolvency if cash is inadequate. A satisfied set of current creditors is a healthy and important source of credit for short-term uses of cash (inventory and receivables). A dissatisfied …

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An Accounting Primer: Liabilities and Net Worth

Liabilities and Net Worth Liabilities and net worth are sources of cash listed in descending order from the most nervous creditors and soonest to mature obligations (current liabilities), to the least nervous and never due obligations (net worth). There are two sources of funds: lender-investor and owner-investor. Lender-investor funds consist of trade suppliers, employees, tax …

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An Accounting Primer: Fixed Assets, Intangibles, and Other Assets

Fixed Assets: Fixed assets represent the use of cash to purchase physical assets whose life exceeds one year, such as: Land Building Machinery and equipment Furniture and fixtures Leasehold improvements Intangibles: Intangibles are assets with an undetermined life that may never mature into cash. For most analysis purposes, intangibles are ignored as assets and are …

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