Whether you deal with Angels, Venture Capital investors or your local banker as a small business owner you need to understand the documentation requirements of fund raising as well as the due diligence and pre-investment audit process. While the process is cumbersome and awkward the primary issue with small business owners is preparation, generating the [...]

In our previous post we covered the three basic inventory valuation models. We now illustrate a simple example of the average cost model in the table below:

Bought

Sold

Average cost per unit

May

5 units @ $20/unit

$20

Jun

3 units costing $20 each

Jul

10 units @ $18/unit

[(2x20) + (10x18)]/12 = $ 18.33

Aug

10 units costing $18.33 each

Sep

5 units @ $19/unit

[(2x18.33)+(5x19)]/7 = $ [...]

Inventory valuation models and profitability

In order to value inventory, there is a physical count of inventory that takes place at the end of the year which can be a tedious task. This is because even though a business may have an inventory where all the units are identical, the prices on these units could vary. [...]

Small Business

Small Business Credit Training: Getting a grip on Finance and Ratio analysis with case studies
Small Business Credit Training: Ratio Analysis, Finance, Accounting and Credit Process
Small Business Credit Training – Understanding Credit Process and Loan Approval basics
Small business credit and finance training – credit and small business loan processing and approval basics
Small business Finance Training: [...]

Accounting short course – Reviewing the Trial Balance
Let us consider a comprehensive example that uses everything that we have learnt up until now.
Following are the business transactions of a newly formed business setup by Andrew.
2010 Accounting transaction
May 1 Started business with $50000 in the bank.

May 2 Bought inventory on credit from: Smith $6000, Rachel $3000, [...]

The basic accounting short course for small business was put together as a quick survival guide for accounting neophytes.  As small business owners  most of us understand debit and credit and the concept of Journals and Ledgers, some of us missed the formal organization of an accounting course.  The course starts with the very basics [...]

Accounting short course: Introducing the Trial Balance

Until now, we have been reviewing how to record business transactions. Given the volume and details involved in recording accounting transactions tedious work and there are chances of making mistakes. Accounting systems and accounting process realizes this limitation and has a control process in place to identify, [...]

So a quick recap. All the items that cannot come in the purchases and sales ledger have their accounts in the general ledger. Apart from these accounts sales, purchases, sales return and purchase return have their accounts in the general ledger as well. For the transaction mentioned and covered in the previous section of [...]

Accounting Crash Course: Small Business Accounting: Cash Book Example

Let’s see everything in action in an example.
Following are the cash transactions of Alan’s business:
Balances brought forward from last month; cash: $6000 and bank: $300 (credit)

Jan. 3 Cash sales of $1000 paid by cheque.

Jan. 5 Paid $550 cash to Samantha for the inventory bought on credit from [...]

Basic Accounting Crash Course: Cash Book and recording cash discounts

Up until this point we have only dealt with credit transactions. We haven’t dealt with any cash. We will now be learning how to record cash transactions. All the cash (or for that matter bank) transactions are recorded in the cash book. Following is an excerpt [...]