855.200.1020
The primary purpose of journals and ledgers is to present you with the information you need to analyze your financial success. The reason for having so many different accounts and categories of related accounts is so you can easily look at specific parts of your business to make sure they are profitable. Continue reading
When you are doing a quick profit-loss assessment in your business, you are probably using one or more “T-accounts,” which simply list inflows of value on one side and outflows on the other. I use the word “value” because it is not necessarily cash—inventory holds future value for you and so you account for it with a dollar figure. For example, let’s say that you buy inventory for $5,000. In this transaction, you will debit your inventory T-account for $5,000 and credit cash for $5,000. Both of these T-accounts are in the asset category, and you are converting money into goods that hold future value for you. Continue reading
