Posts in the Financial Accounting category:

Financial Accounting

Cost Classifications – Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs

Written by Bob Steele CPA - Accounting Instruction, Help & How To on . Leave a comment

Cost classification will go over some of the classification methods used in managerial accounting. It is often useful to classify cost by behavior because this helps us generate projections. The two major classifications of costs by behavior are fixed costs and variable costs. Fixed costs do not increase as production increases. Rent is a good example of a fixed costs. As production increases the amount of rent stays the same. Variable costs increase with production. Direct materials is an example of a variable cost.
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Financial Accounting

Managerial Accounting Introduction

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Managerial accounting introduction will introduce the topic of managerial accounting. It is useful to compare managerial accounting to financial accounting. Most differences between the two accounting categories are derived from the objectives of the users. In other words, managerial accounting is designed to help internal users while financial accounting is designed to help external users. Financial accounting has more laws and regulations because external users are depending on them. Managerial accounting reports can be generated any time where as financial accounting reports are generated based on a strict schedule. Managerial accounting if future focused while financial accounting is based on reporting past numbers. Managerial accounting often focuses on segments of an organization while financial accounting looks at the big picture. Managerial accounting will use a lot of numerical data but will also use other forms of data while financial accounting generally focuses on dollars as the form of reporting.
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Financial Accounting

Bonds Present Value Formulas

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Present value formulas for bonds will take a look at the present value formulas for both a single payment and for an annuity. One of the reasons bonds works well to practice present value formulas is because they have both a single payment at the end of the term and an annuity payment and these are the major two formats we can use to calculate present value. Present value can be calculated multiple different ways. Present value can be calculated using equations, using present value tables, using financial calculators, or using Excel. We will focus on the present value formulas here.
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Financial Accounting

Statement of Cash Flows-Indirect Method-Change In Accounts Payable

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Statement of cash flows using the indirect method and concentrating on the change in accounts payable. The indirect method will differ from the direct method by starting with net income and entering adjustments to arrive at cash flows from operations. The indirect method reconciles net income to cash flows from operations by analyzing the changes in balance sheets accounts, in current assets and current liabilities. When considering these changes we can learn a rule that helps us construct the statement of cash flows and it is also useful to understand the reasoning behind the rule.
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Financial Accounting

Statement of Cash Flow Investing Activities -Cash Paid for Equipment

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Statement of cash flows investing activities will look at cash flows related to investing activities. Investing activities will include cash flows from investments like stocks and bonds but also includes investments in long term assets like property plant and equipment. Cash outflows and cash inflows for property plant and equipment will be included in the investing activities section. Because equipment is often financed when purchased we often need to look at the detail of the transaction to complete the investing activities section.
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Financial Accounting

Corporation Comp. Prob. Worksheet 10

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Corporation comprehensive problem will cover the worksheet we will use for a comprehensive corporation accounting problem. The worksheets will be in PDF format and available for download so that we can work through the problem. We can work through the entire problem with one worksheet or we can print a new PDF worksheet for each step along the way, each worksheet containing the number us to the point we are working on.
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Financial Accounting

Partnership Comp Prob Draws -130 How to Record Journal Entry For Withdraws

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Partnership journal entry for draws will record the journal entry related to withdraws. We will enter the journal entry into the general journal, post it to the general ledger, and create the trial balance from the general ledger. The accounting transaction will debit draws and credit cash.
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Financial Accounting

Note Payable Journal Entry-Journalize the Journal Entry for Installment Note

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Notes payable journal entry will journize the journal entry to record an installment note. We will enter the accounting transaction into a general journal and then post the transaction to a worksheet so we can see the impact on individual accounts and the accounting equation. The transaction to record a loan is surprisingly simple, but can be confusing because of the added information we have which is not needed for the initial journal entry. For example, we we will often know the interest rates and installment payment amounts but the interest rate is not needed for the initial recording of the financial transaction. Interest in not recorded at the start of the note because no time has passed. Interest is like rent owned on purchasing power of money. At the time we take out a loan no rent or time or interest has accumulated.
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Financial Accounting

Proprietor Comp Prob Pay Expenses-120 Journal Entries to Pay Monthly Expenses With Cash

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Sole proprietorship pay monthly expenses with cash will record the journal entry to pay normal monthly expenses including utilities, telephone, and wages. We will enter financial transactions into the general journal, post them to the general ledger, and then build the trial balance from the general ledger. The journal entries will be a debit to expense and a credit to cash.
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Financial Accounting

Statement of Cash Flows Strategy – Cash Flow Thought Process

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Statement of cash flows strategy will go over how we can think about cash flows. The most obvious and direct way to think about cash flows is to think about the change in cash over a time period. To analyze a change in cash we can go to the general ledger to look at the detail of activity that happen for a period of time. The general ledger will show transactions related to cash by date. Although this method makes the most since is does have problems. The cash account will have a lot of transactions in the general ledger, more them most any other account. It may be difficult to re-categorize each transaction. We can also think about the cash flow using the accounting equation, and this is often the approach we will use in practice.
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