Articles by John Day

Click on any title below to download articles.

Note: Downloaded files require Adobe Reader or other PDF file viewer. Click the link at right to download your free copy of Adobe Reader.

Small Business Accounting Issues and Solutions

The articles listed below are derived from previous issues of John Day's newsletter, The Journal Entry (no longer published). The format consists of a theme, definition of a related term or terms, feature article, question, and a tip. You can scan through the list of themes and titles to find an area of interest. You are welcome to download any article you wish.

Theme: Debits and Credits

Accounting Term:

Double-Entry Method

Feature Article:

Two QuickBooks Traps - Watch Out!

Question:

Why does a Balance Sheet balance?

Tip:

Cash as a Reference

Theme: Business Organizations

Accounting Term:

Entity

Feature Article:

Choosing the Right Business Entity

Question:

When Should I Incorporate?

Tip:

How Contributions are Recorded Within the Entities

Theme: The Bottom Line

Accounting Term:

Net Profit or Loss

Feature Article:

Understanding The “Bottom Line”

Question:

Why Is The Owner’s Draw Not Taxable?

Tip:

How To Avoid Double-Taxation In A Corporation

Theme: Accrual vs. Cash

Accounting Term:

Accrual Basis

Feature Article:

Accrual vs. Cash Basis Accounting

Question:

Can I Use Accrual for My Books and Cash for My Taxes?

Tip:

Simplify and Use a Hybrid System

Theme: CPAs vs. Non-CPAs

Accounting Term:

Certified Public Accountant (CPA)

Feature Article:

CPAs vs. Independent Non-Certified Accountants

Question:

Do I Need An Accountant?

Tip:

How to Select An Accountant

Theme: The Bank Reconciliation

Accounting Term:

Bank Reconciliation

Feature Article:

The Bank Reconciliation – Your Most Important Navigational Tool

Question:

What is a Deposit-in-Transit?

Tip:

Why You Should Not Prepare a Bank Reconciliation on the Back of
Your Bank Statement.

Theme: Selecting An Accounting System

Accounting Term:

Chart of Accounts

Feature Article:

Selecting an Accounting System

Question:

How Can I Bypass The Accounting Software’s Accounts Payable and Accounts Receivable Systems If I Don’t Need Them?

Tip:

Getting Started With Your New Accounting Software

Theme: Independent Contractor vs. Employee

Accounting Term:

Independent Contractor

Feature Article:

Defining An Independent Contractor

Question:

What Risks Are Involved In Hiring An Independent Contractor?

Tip:

Strategies For Business Owners

Theme: Depreciation

Accounting Term:

Depreciation

Feature Article:

Understanding Depreciation

Question:

How Is Asset “Book Value” Established?

Tip:

How To Maximize Your Tax Depreciation Deduction Each Year

Theme: Loans vs Leases

Accounting Term:

Lease

Feature Article:

Loans VS. Leases

Question:

What Is The Difference Between Simple and Compound Interest?

Tip:

How To Figure The Interest On A Note With Irregular Payments

Theme: Business Ratios & Bank Loans

Accounting Term:

Ratio

Feature Article:

Applying For A Business Loan: Putting Your Best Foot Forward

Question:

What Ratios Should I Use To Determine The Health Of My Business?

Tip:

Selecting Useful Business Ratios For A Small Business

Theme: Financial Integrity Part 1

Accounting Term:

Financial Code-Of-Ethics

Feature Article:

The “Easy Money” Trap

Question:

Why Can Credit Card Companies Charge Such High Interest Rates?

Tip:

Recording Credit Card Expenses On Your Books

Theme: Financial Integrity Part 2

Accounting Term:

Corporation & Audit

Feature Article:

Who’s Driving The Bus?

Question:

Can Corporations Navigate Without A Moral Compass?

Tip:

Collaboration is the Key

Theme: Financial Integrity Part 3

Accounting Term:

Budget

Feature Article:

Taking Control – Using The Strategy Of The Four P’s

Question:

What Steps Are Involved In Setting Up A Budget?

Tip:

The A-B-C Priority System

Theme: Non Profit Organizations

Accounting Term:

Fund, Asset, Fund Balance

Feature Article:

Non-Profit Organizations

Question:

What Is The Difference Between Fund Balance and Net Asset
Accounting?

Tip:

How To Record Revenue And Receivables When Using Cash-Basis
Accounting

Theme: Valuing Goodwill

Accounting Term:

Goodwill

Feature Article:

Valuing Goodwill

Question:

What Should I Do If The Seller Has Two Sets Of Books?

Tip:

A Quick Test For The Existence Of Goodwill

Theme: Disposing of Assets

Accounting Term:

Gain/Loss

Feature Article:

Figuring Gain/Loss When Selling Assets

Question:

What About Trade-Ins?

Tip:

Maintain A Fixed Asset Schedule

Theme: Petty Cash

Accounting Term:

Petty Cash

Feature Article:

Why Petty Cash?

Question:

How Is Petty Cash Replenished?

Tip:

How To Record Out-Of-Pocket Expenses

Theme: Payroll

Accounting Term:

Payroll Clearing Account

Feature Article:

Recording Payroll On Your Books

Question:

How Is An Employee Payroll Advance Recorded?

Tip:

Using The Officer Advance Account To Capture Irregular Draws

Theme: The General Ledger

Accounting Term:

General Ledger

Feature Article:

The Detail Of The General Ledger Report: Your Most
Valuable Analytic Tool

Question:

What Is The Difference Between The General Ledger and The
Trial Balance?

Tip:

Check Your Balances

Theme: Accounting Principles & Standards

Accounting Term:

Accounting Principles

Feature Article:

Accounting Principles And Accounting Standards:
Avoid Them At Your Own Peril.

Question:

Is There An Accounting Police Force?

Tip:

Eight Good Reasons To Prepare Financial Statements

Theme: Accounts Receivable

Accounting Term:

Accounts Receivable

Feature Article:

Working With Accounts Receivable

Question:

How To Journalize Bad Debts?

Tip:

Collecting Outstanding Receivables

Theme: Cash Flow

Accounting Term:

Cash Flow

Feature Article:

The Statement of Cash Flows

Question:

Is There Only One Method For Preparing A Statement Of Cash
Flows?

Tip:

A Quick And Dirty Cash Flow Analysis

Theme: Cost of Goods Sold

Accounting Term:

Cost of Goods Sold

Feature Article:

Recording Cost of Goods Sold

Question:

How Often Must I Take A Physical Inventory Count?

Tip:

Differentiate Between Cost of Goods Sold Percentage and Mark-up
Percentage.

Theme: General Journal

Accounting Term:

General Journal

Feature Article:

Miscellaneous Suspense – The Handy-Dandy GL
Account

Question:

When Should The General Journal Be Used?

Tip:

How To Use The Deferred Income/Customer Deposit GL Account

Theme: Closing the Books

Accounting Term:

Support Document

Feature Article:

Closing The Books

Question:

Is There A Technique For Referencing Support Documents?

Tip:

How To Distribute Net Profit or Loss To Partner’s Capital Accounts

Theme: Getting Organized

Accounting Term:

Chart of Accounts

Feature Article:

Organization: The Key To Your Sanity

Question:

How Should The Chart of Accounts Be Organized?

Tip:

Some General Ledger Account Tips & Tidbits

Theme: Accounting for Inventory

Accounting Term:

Inventory

Feature Article:

Understanding Inventory Accounting

Question:

How Does Manufacturing Inventory Accounting Work?

Tip:

Using Accrual Or Cash Basis For Inventory

Theme: Inventory Estimation Techniques

Accounting Term:

Retail Method Terminology

Feature Article:

Retail Method Revisited

Question:

How Can I Value My Inventory If Lost In A Fire?

Tip:

Figuring Sales Tax When It Is Included In Gross Sales

Theme: Client Write Up

Accounting Term:

Write-up

Feature Article:

Developing Your Own Accounting Practice

Question:

How Do I Conduct A New Client Interview?

Tip:

Sample Compilation Letter

Theme: Understanding Equity Accounts

Accounting Term:

Equity

Feature Article:

The Equity Account – It’s Your Money

Question:

Can I Have Negative Equity?

Tip:

Keep Track Of Inside and Outside Basis

Theme: Revenue Realization Principle

Accounting Term:

Revenue

Feature Article:

Realizing and Recognizing Revenue Under The
Accrual Method Of Accounting

Question:

When Does The Transfer Of Ownership Of Goods And
Services Actually Occur?

Tip:

Realizing And Recognizing Revenue When Using Cash Basis Accounting Method

Theme: Accounting Cost Concepts

Accounting Term:

Matching Principle

Feature Article:

Historical Cost Concept

Question:

When Does An Expenditure Become An Expense?

Tip:

Matching Expense To Revenue

Theme: Analyzing Financial Statements

Accounting Term:

Vertical & Horizontal Analysis

Feature Article:

Analyzing The P&L Statement

Question:

How To Do You Perform A Quick Analysis Of The Balance
Sheet?

Tip:

Month End Ten Point Checklist

Theme: Detecting Accounting Errors

Accounting Term:

Transposition Error

Feature Article:

Detecting Accounting Errors

Question:

How Are Accounting Errors Corrected?

Tip:

Finding And Fixing Bank Reconciliation Errors

Theme: Commingling Items

Accounting Term:

Commingle

Feature Article:

Commingling Business & Personal Items

Question:

What Problems Result From Commingling?

Tip:

Keeping Commingled Items Separate

Theme: Bad Debts

Accounting Term:

Bad Debt

Feature Article:

Recording Bad Debt: Accrual and Cash

Question:

How Are Bad Debts Recorded For A Notes Receivable?

Tip:

Three Methods of Determining Bad Debts

Theme: Intangible Assets

Accounting Term:

Intangible Assets

Feature Article:

Identifying Intangible Assets

Question:

Do I Have To Follow SFAS 142 Rules Regarding Intangible
Assets?

Tip:

Some Exceptions To The Rules

Theme: Liabilities

Accounting Term:

Liability

Feature Article:

The Structure And Purpose Of Liabilities

Question:

What Part Do Liabilities Play In Determining Working Capital?

Tip:

Using “Due To” and “Due From” Accounts

Theme: S Corporations

Accounting Term:

S Corporations

Feature Article:

The Accounting Structure of S corps

Question:

Should an LLC Choose to be Taxed as an S corp?

Tip:

Officer's Salary VS. Draw in an S corp

Theme: C Corporations

Accounting Term:

Corporation

Feature Article:

The Organizational Structure of a Corporation

Question:

What Are The Advantages and/or Disadvantages of
Incorporating?

Tip:

Some Words to the Wise

Theme: Liquidating a Sole Proprietorship

Accounting Term:

Sole Proprietorship

Feature Article:

Liquidating A Sole Proprietorship

Question:

When is it Time to Liquidate?

Tip:

Tax Forms Used to Report the Liquidation

Theme: Business Dispositions

Accounting Term:

Capital Asset

Feature Article:

Disposition Of A Sole Proprietorship

Question:

How Are Corporations And Partnerships Disposed Of?

Tip:

A Risky Way To Sell A Business

Theme: Accountant/Client Relations

Accounting Term:

Value Added Approach

Feature Article:

Building Client Trust & Loyalty Through Education

Question:

Does Your Accountant Care About You?

Tip:

Shop Around

Theme: Economic Downturn - Working With It

Accounting Term:

Recession vs. Depression

Feature Article:

Tough Times: A Good Thing?

Question:

I’m Unemployed! What Now?

Tip:

Hunker Down and Work Together

Theme: Writing Journal Entries

Accounting Term:

Financial Transaction vs. Accounting Transaction

Feature Article:

Writing General Journals Entries – A Six-Step Method

Question:

What Shortcuts Are Used When Writing Journal Entries?

Tip:

Use A Protocol When Writing Journal Entries

Theme: T-Accounts

Accounting Term:

T-Account

Feature Article:

Working With T-Accounts

Question:

Is There A Way To Keep Track Of Multiple T-Account Entries?

Tip:

Summarizing Your Work

Theme: Starting or Buying a New Business

Accounting Term:

Amortization

Feature Article:

Setting Up The Beginning Balance Sheet

Question:

Can Start-Up Costs, Organizational Expenses, and Intangible
Assets Be Written Off?

Tip:

Internal Controls

Theme: Accounts Payable

Accounting Term:

Accounts Payable

Feature Article:

Accounts Payable Accounting

Question:

What If I Can’t Pay My Accounts Payable On Time?

Tip:

How Accounts Payable Works When Using Modified Cash Basis Financial Statements