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