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Accounting Articles

April 6, 2014

In part 1 of this series, we learned how to calculate the cost of different forms of financing -- debt, preferred equity, and common equity. In this article, we’ll cover some ways that information can be used to make sound business decisions.

March 29, 2014

In this two-part article series, we will discuss how to calculate a firm’s cost of capital. This is an important measurement with several business applications. We’ll go over the basic concepts below - the second part will focus on the practical applications.

March 22, 2014

Many sales transactions are paid for immediately by the customer, and are relatively straightforward to account for. On the other hand, a sales contract might call for annual payments. The question then becomes, when should revenue be recognized? There are three general ways to account for the sale revenue, and the method used depends on the reliability of future cash payments.

March 2, 2014

In theory, bonds are easy to account for. A long-term liability is established on the balance sheet, and periodic interest expense is applied to the calculation of net income. When the bond is repaid, the liability is cleared from the balance sheet. Not all bonds, however, are that simple to handle.

February 23, 2014

There are three main forms of financing available to a corporation. In this article, we discuss preferred stock, the middle-of-the-road option that sits between debt and common equity.

February 15, 2014

Long gone are the days where large companies only sell products in one country. The growth of the global economy has provided many opportunities for growth, but that growth has brought with it unique accounting challenges. In this article, we’ll describe several common issues associated with accounting for transactions in foreign currencies.

February 9, 2014

Most articles on this site deal with companies that operate for profit. In this article, we discuss a few differences encountered when accounting for companies that have non-for-profit purposes.

February 3, 2014

In the last article, we discussed partner capital accounts, contributions, and withdrawals, as well as the allocation of periodic income. Now we’ll look at how to account for the termination of a partnership.

January 26, 2014

Many of the accounting principles on this website apply to any type of company. In this series of articles, we focus on the basics of accounting for partnerships, a business entity formed by two or more owners that is less structured than a corporation.

January 11, 2014

The process of tracking production costs is critical for the information needs and reporting requirements of manufacturers. In this article, we’ll discuss a method of cost distribution called job costing. After describing the theory behind job costing, we’ll walk through an example - a manufacturer of drag race engines.

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