Articles by John Day
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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:
- Iծemployed! 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 ᠓ix-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