Kruze’s accounting team knows how to explain what financial statements mean and how important metrics impact a startup’s strategy. As a startup founder, you’ll need to choose early on whether to spend your valuable time on accounting and bookkeeping tasks, or to outsource to the experts. Keeping good records also […]

They are especially important for reconciliation in large companies with a high volume of transactions when only the balance of the account is needed. Control accounts work as a summary account, presenting the balance of the subsidiary accounts without including the transaction details. Companies using a control account typically post […]

If “Freight Prepaid” is where the seller takes on the shipping costs, “Freight Collect” flips that script. In a Freight Collect arrangement, the buyer pays for all shipping costs, from the originating port to the final destination. This means that the buyer assumes ownership and responsibility as soon as the […]

A post-closing trial balance is a listing of all balance sheet accounts containing non-zero balances at the end of a reporting period. The post-closing trial balance is used to verify that the total of all debit balances equals the total of all credit balances, which should net to zero. Like […]

This net income figure is used to prepare the statement of retained earnings. However, most businesses can streamline this cycle and skip tedious steps like posting transactions to the general ledger and creating a trial balance. Using accounting software like QuickBooks Online can do all these tasks for you behind […]

You also cannot deduct expenses such as loan repayment, loss of livestock (if you deducted the cost of raising them as an expense), or membership fees (e.g., country club). Reporting income in your accounting books is just part of the fun—you need to report expenses, too. And in farm accounting, […]

You may even qualify for a home office deduction if you have a dedicated space where you conduct business in your home. Keep in mind that to qualify for the deduction, the room can’t be used for personal purposes. If you’re a salon or barbershop owner, you’re most likely self-employed […]

You can gain additional insights regarding the cash flows from operating activities from our Explanation of the Cash Flow Statement. The following examples feature the shareholders’ equity statement and show how to calculate shareholders’ equity with respect to all the above-mentioned components. The shareholders’ equity comprises components that play an important part in determining […]

Goodwill, for example, is often valued based on the partnership’s earning potential and reputation, requiring a more subjective approach. This might involve discounted cash flow analysis or other financial models that project future earnings and discount them to present value. Valuing partnership assets is a nuanced task that requires a […]

Furthermore, accounts receivable are classified as current assets, because the account balance is expected from the debtor in one year or less. Other current assets on a company’s books might include cash and cash equivalents, inventory, and readily marketable securities. Companies record accounts receivable constructing the effective tax rate reconciliation […]