Archive | Accounting

Accounting for Paid Time Off (PTO). Could there be a more boring, mundane, accounting-nerd sort of topic? Probably. But it should matter to you and let me tell you why. Whether you’re a business owner, banker, consultant or employee, the businesses you are involved in probably have something in common with most other businesses: the […]

Much is made of financial metrics. This is good but often the simplest metrics are the best. Here I discuss one of the most important: Gross Margin. Like many financial measures, the calculation of Gross Margin isn’t that straightforward. Even looking at the financial statements of publicly traded companies won’t clarify the matter as practices […]

QuickBooks has established itself as the standard accounting software for small (and not-so-small) businesses. A few years ago, the Journal of Accounting, the official publication of the American Institute of CPAs, did a survey on small business accounting softwares. The result was that QuickBooks has a 90% market share, Peachtree has a 9% market share […]

When I approach a business with financial challenges, and most have financial challenges, I use a triage approach I call “The Financial Holy Trinity.” Really, it is this approach that informs almost everything I do in a business. My belief is that there short, medium and long-term financial concerns in a business. The Financial Holy […]

Ratio Analysis is the most common tool for analyzing financial statements and what they can tell us about a business. Ratio Analysis starts with the business’s (presumably) accurate financial statements. Those statements provide an accounting picture of the operations (for a period) and the financial position (at a point in time). While financial statements are […]

The third financial statement, the Statement of Cash Flows, ties the Income Statement and Balance Sheet together. Many, considering that “cash is king,” view this as the most important of the financial statements. It is generally not even prepared, which puts a business owner in the dark about cash. The Statement of Cash Flows, like […]

The Balance Sheet measures the business’ position at a point in time. It is a snapshot of the business that is often neglected by less than savvy business owners. The American-style Balance Sheet shows the assets on the left side and the liabilities and equity on the right side. The two sides balance, hence the […]

The Income Statement is the most frequently used of the primary financial statements. Also known as the Profit and Loss or P&L, the Income Statement measures the results of business operations for a period of time. This contrasts with the Balance Sheet which is the business’ position at a point in time. The Income Statement […]