In this series of articles, we will discuss the different types of financial statements required of a corporation by US GAAP and the different reports required of public companies by the Securities and Exchange Commission. For this part 1, we will give a brief overview of the major financial statements produced by a corporation - balance sheet, income statement, statement of shareholders’ equity, cash flow statement and related footnotes.

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.

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.

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.

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.

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.

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.

Most businesses have bank accounts. A number of situations can take place in relation to such accounts. For example, a company may have written checks in excess of a bank balance. Or a company may have a zero balance account and any checks that clear the company’s bank account are financed by a revolving line of credit. How should these transactions be recorded on the balance sheet? What about the statement of cash flows? In this article you will find answers to these questions.

Organizations purchase insurance to obtain protection from unforeseen events and to “share” the cost of potential losses with other entities. Insurance can cover business, auto, health and workers’ compensation losses, among others. In this article, we will look at situations when insurance companies quote an annual premium for coverage and how this is accounted for.

Numerous suppliers (e.g., in the automotive industry) work with their customers to design and develop products or molds, dies, and other tools to manufacture such products. These costs may be called preproduction costs related to long-term supply arrangements. Under these arrangements, customers sometimes reimburse suppliers for the incurred costs. In this article, we will discuss accounting for such costs.