Category: Bookkeeping

EAs are federally authorized to represent taxpayers before the IRS and have unlimited representation rights. This means EAs can represent any taxpayer, whether they prepared their income tax return or not. They can also represent any tax matter, as well as appeal to any office of the IRS. The NAEA is the nation’s leading community for tax practitioners – from aspiring enrolled agents to experts with decades of experience. We are advancing the professional tax practice through leadership, management, community,…

For every asset you have in use, there is an initial cost (aka original basis) and value loss over time (aka accumulated depreciation). Proration reduces the depreciation that you can claim in a given year. Proration considers the accounting period that an asset had depreciated over based on when you bought the asset. For example, imagine Company ABC buys a company vehicle for $10,000 with no salvage value at the end of its life. The company decided it would depreciate…

COGS only includes costs and expenses related to producing or purchasing products for sale or resale such as storage and direct labor costs. Cost of goods sold, or COGS, is the total cost a business has paid out of pocket to sell a product or service. It represents the amount that the business must recover when selling an item to break even before bringing in a profit. Here’s everything you need to know about fixed vs variable costs, with examples…

Talk to businesses in your area to see what they are currently paying for bookkeeping services. Talk to people in your network who are also bookkeepers and ask what they are charging. In doing so, you can get a good idea as to the range bookkeepers charge for services. If you’re considering becoming a bookkeeper, read our guide to learn how to start a bookkeeping business in 2024. You can go with the baseline plan, the Simple Start plan, for…

The best online bookkeeping services are affordable and easy to use, offer a wide range of bookkeeping solutions, and provide easy access to dedicated bookkeepers. Many of the top services also have add-on services, such as catch-up bookkeeping, payroll, and tax filing, which can streamline your work. Its pricing can be a bit confusing as there is a sliding scale based on not only the accounting basis but also the amount of monthly expenses and the frequency and type of…

At the end of the balance sheet total sum is calculated, and according to the rule of thumb total assets and total liabilities should be the same in amount. Long term and short term liability are written on the right side of the balance sheets. A company can use its balance sheet to craft internal decisions, though the information presented is usually not as helpful as an income statement. A company may look at its balance sheet to measure risk,…

A bond sold at a premium to par has a market price that is above the face value amount. When a bond is issued at a price higher than its par value, the difference is called bond premium. The bond premium must be amortized over the life of the bond using the effective interest method or straight-line method. The discount on bonds payable account has a debit balance of 8,663 which needs to be amortized to the interest expense account…

Thus, the cash flow statement (CFS) or footnotes section are recommended financial filings to obtain the precise value of a company’s depreciation expense. The double declining method (DDB) is a form of accelerated depreciation, where a greater proportion of the total depreciation expense is recognized in the initial stages. Depreciation is a non-cash expense that allocates the purchase of fixed assets, or capital expenditures (Capex), over its estimated useful life. Suppose, however, that the company had been using an accelerated…

If it has a salvage value, then the depreciable base is the amount you paid minus the salvage value. To help you get a sense of the depreciation rates for each method, and how they compare, let’s use the bouncy castle and create a 10-year depreciation schedule. You divide the asset’s remaining lifespan by the SYD, then multiply the number by the cost to get your write off for the year. That sounds complicated, but in practice it’s pretty simple,…

The aging method also makes it easier for management to make changes in credit policies and discounts offered to customers. Also, generating the report before the month ends will show fewer receivables whereas, in reality, there are more pending receivables. Management should match their credit terms to the periods of the aging reports to get an accurate presentation of the accounts receivable. The allowance method estimates bad debt expense at the end of the fiscal year, setting up a reserve…