The Break-Even Point – What is it, Why does it Matter, and how do you calculate it? Knowing what your break-even point is, is critical in any business. Whether it’s understanding how many units you need to sell or how much revenue you need to generate, understanding break-even is the difference between success and failure. […]
In accounting terms, Cost of Goods Sold is simply the cost of an item to a retailer, manufacturer or distributor. COGS is a form of expense, and is recorded in an income statement. There are two ways to calculate Cost of Goods Sold, which we will look at in this article. First though, let’s look at […]
We looked in a previous article at the methods used to calculate Cost of Good Sold. FIFO and LIFO are two ways of determining that cost. FIFO (First In, First Out) calculates Cost of Goods Sold on the basis that a business’s oldest inventory items are sold first. LIFO (Last In, First Out) on the […]
The first step in calculating retained earnings is to subtract a business’s liabilities from its assets to determine stockholder equity. Next, on the balance sheet find the common stock line item and subtract this figure from the shareholder equity (this assumes that the common stock and retained earnings are the only two items in your […]
Understanding your profitability is absolutely vital if you are to make good business decisions. A profit & loss statement will help you to determine whether your revenue is greater than your expenses, and thus whether you are making a profit or a loss. There are three main sections to a profit & loss statement – […]
Manufacturing overhead costs are all the indirect factory expenses associated with the manufacture of a product. Calculating manufacturing overhead involves adding together costs such as indirect materials, plant repair, indirect labor costs, insurance, factory supplies, depreciation, utilities. Manufacturing overhead is sometimes referred to as factory overheads or manufacturing support costs. Whichever term you hear, it’s […]
It’s all too easy to think that your clients and clients don’t want to receive your invoices. But in fact, if you invoice right your clients will actually be glad to get them. After all, a clear, professional invoice makes it easy to see how much is owed, for what services, and how it can […]
Bank reconciliation is the process whereby you match your bank statement to corresponding entries on your balance sheet. Identifying any discrepancies will help you to correct your accounting records, and spot potentially fraudulent transactions. How do You do a Bank Reconciliation? Bank reconciliation is a comparison of your account balance as reported by your […]
So you’ve decided to start a small business? It’s an exciting time and it’s going to require all your commitment to make it a success. But remember that it doesn’t have to be funded solely by you, or by way of a bank loan. If you want to ease some of the financial strain of […]
Being outstanding at delivering the products and services your business is known for is great – but it’s only part of the picture. The future health and growth of your business depends on making smart decisions based on solid information. To drive your business forward, you will need to: Have a plan. Whether it’s to […]
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