Category Archives: Bookkeeping

Let’s lock this line in place, and attach springs between the data points and the line. In this section, we’re going to explore least squares, understand what it means, learn the general formula, steps to plot it on a graph, know what are its limitations, and see what tricks we can use with least squares. […]

The idea behind the calculation is to minimize the sum of the squares of the vertical errors between the data points and cost function. The red points in the above plot represent the data points for the sample how to figure the common size balance-sheet percentages data available. Independent variables are plotted as x-coordinates, and […]

After an event is identified to have an economic impact on the accounting equation, the business event must be analyzed to see how the transaction changed the accounting equation. When the company purchased the vehicle, it spent cash and received a vehicle. Both of these accounts are asset accounts, so the overall accounting equation didn’t […]

Extended service contracts for appliances and electronics sell for a specific price, cover specific repairs and have a specific time frame within which you can get free or reduced price service. Deskera is an award-winning cloud-based accounting software that integrates directly with your business bank account. When revenue is recorded in the general ledger, there […]

The method used to recognize unearned revenue will depend on the type of business and the product or service being offered. As the company delivers the product or service, the liability decreases, and revenue is recognized. This means that unearned revenue will eventually become earned revenue, and the liability will be reduced to zero. A […]

Thus, the resulting ratios, taking into account the planned sales volume, are then used to compile the forecasted financial statements. The goal for management is to ensure costs increase proportionately to revenues. With this information, management can look further into which costs are causing this relationship and implement effective cost cutting procedures. Management typically performs […]

This information can then inform marketing strategies, inventory management, and resource allocation. The term “footing” originated from the practice of writing the final sum at the foot or bottom of a column. This visual representation made it easier for accountants to quickly reference and comprehend the totals. While the advent of modern accounting software has […]

The cost of goods sold for 40 of the items is $10 and the entire first order of 100 units has been fully sold. The other 10 units that are sold have a cost of $15 each and the remaining 90 units in inventory are valued at $15 each or the most recent price paid. […]

Companies have their choice between several different accounting inventory methods, though there are restrictions regarding IFRS. A company’s taxable income, net income, and balance sheet balances will all vary based on the inventory method selected. FIFO is also the most accurate method for reflecting the actual flow of inventory for most businesses. Improved Cash Flow […]

They provide a simplified view of data and may oversimplify or overlook certain nuances and qualitative factors. Further analysis techniques and contextual understanding are necessary to gain a comprehensive understanding of the financial position and performance. In a cash flow statement, footings are used to display the total cash inflows and outflows from operating activities, […]