It appears like everybody desires to be a business owner these days. Beginning Your Service is seen as an attractive, extravagant way of life that offers the supreme liberty when it comes to the selection of career. You desire to end up being a business owner. Being a business owner is a great deal of […]

The going concern concept states that a business will continue with its operations for the foreseeable future. The concept assumes that the company won’t be forced to discontinue its operations or liquidate due to any reason. A perfect example of implementation of such concept in accounting is the calculation of depreciation based on the anticipated economic […]

Depreciation is a systematic reduction in the cost of a fixed asset in your business. As fixed assets such as machines wear out, they tend to lose value. Think about the computer you have been using. Perhaps you expect it to serve you for about six years. Do you expect it to have the same […]

As a business owner, you need to make many decisions. One of these decisions touches on how your business deals with its costs. When your business spends money, you can either account for the costs as expenses or capitalize the costs. Expending and capitalizing of costs refer to how you can treat costs on your […]

Impairment of a fixed asset arises when the fair value of an asset suddenly drops below its recorded value. For you to account for fixed asset impairment, you should write off the difference between the recorded asset cost and its fair value. Note that some asset impairments can be so huge that they may result […]

You can sell a fixed asset any time during its useful life. This raises the need to recognize any gain or loss resulting from the sale of the asset (disposal) in your business income statement and de-recognize the asset from the business balance sheet. Besides, you should update the asset’s depreciation expense after selling the […]

Machinery, furniture, outdoor lighting, equipment, buildings, computers, vehicles, and parking lots are some of the assets that are likely last for more than one year but can’t last indefinitely. In every accounting period, a particular portion of such assets gets used up, perhaps in tear and wear and it is known as depreciation. You should […]

Goodwill on your company’s balance sheet is the value that your company gained after acquiring another. If the acquiring business pays for the target company amount which is more than the target’s book value, the excess amount accounts for the business’s goodwill. If the acquiring business pays less than the target’s book value, then, it […]

Most business people don’t realize when to and when not to recognize revenue. Of course, a sale results in revenue, but when should you recognize this revenue in your business books? Note that you shouldn’t recognize revenues until they are earned. In a case where your products’ return policy allows buyers to return products, the […]

When writing down inventory, you should charge a particular amount of your business inventory assets to expense in the current accounting period. This process is necessary when the products are lost, or their value has decreased. Where necessary, you should write down the inventory before you prepare your business financial statement for the changes made […]