If the businesses year ends on some day other than December 31, we say that the business uses a fiscal year. How should that year be named? Recently, I received a question from a student about the correct way to name a fiscal year. The student asked this question because of the way the fiscal … Continue reading How to name a fiscal year
Category: Accounting
Last week’s poll: introductory financial accounting
Last week I ran a poll on Twitter: https://twitter.com/AccountingJenn/status/1096944010034319360 I asked participants to have one of two qualifications: a bachelor's degree in accounting, or a CPA license. The question read: "Has anybody ever told you that they wished they could have pursued a degree in accounting, but they couldn't pass the introductory financial accounting course?" … Continue reading Last week’s poll: introductory financial accounting
Is bookkeeping taught in financial accounting courses?
Sort of but not really. That's probably not a very satisfying answer so let me explain. Financial accounting courses are not bookkeeping training per se. They are preparation for more advanced courses such as Intermediate Accounting. On the other hand, in my experience solid bookkeeping training (or experience) is excellent preparation for an introductory financial … Continue reading Is bookkeeping taught in financial accounting courses?
Accounting Today quoted from my post about Intuit
Very pleased to see that my blog post about Intuit's entry into the bookkeeping service market was quoted in Accounting Today: Jennifer Johnson of Ledger Light proclaimed in a blog post, “I guess Intuit has finally admitted that QuickBooks isn’t easy for non-bookkeepers to use.” She wrote, "My observation is that small business owners purchase [QuickBooks], figure out … Continue reading Accounting Today quoted from my post about Intuit
Keep electronic files organized by using ISO 8601 date standards
About ten years ago I had a client who used the following date format in the name of his electronic files such as PDFs: 2007-07-31. I quickly realized that this made the files much easier to organize. A couple months ago a friend explained where the date format came from. He said that it comes from the ISO.
Bookkeeping is like weaving on a loom
Bookkeeping is like working on a loom, weaving with yarn. Each strand of yarn is like the running balance in each account in the chart of accounts.
COGS equation: calculating cost of goods sold
Let’s review the traditional cogs equation. It’s very easy to understand. I call this the old-fashioned way to compute cogs since it's not the formula used by modern accounting software such as QuickBooks, which relies on the perpetual inventory system. Even though it seems old fashioned, it's a good formula to memorize. The cogs equation's … Continue reading COGS equation: calculating cost of goods sold
What does Other Comprehensive Income do?
It makes sense to think of the OCI statement as sort of like a reconciliation statement. It accounts for the difference between the FMV reporting and the amortized cost reporting on the two financial statements. But off the top of my head, there is something inconsistent about this. The two most important financial statements used by large firms and investors are required to be reported on different bases.
Bookkeeping vs data entry: they are different and why it matters
Good bookkeepers are not merely data entry clerks, because QuickBooks is not merely a database.
Basic accounting theory
Basic accounting theory is the foundation for all of accounting. It is irreformable and can be learned in an aesthetic way.