Phoenix Arizona CPA | Arizona Tax Accountant | Arizona Income Tax

An integrated understanding all of all the three components of a financial statement - Income statement, Balance sheet and a Cash flow statement is required to understand the operations of any business. The income statement reports the Profit or Loss for a period. The balance Sheet reports on the financial position of the business at any time; what the business owns and what it owes. The cash flow statement on the other hand tracks the movement of cash in the business, answering questions such as what has contributed to the cash inflows and what has contributed to the cash outflows. One should not treat all three statements as independent silos but understand the linkages between the statements. Read the rest of this entry »

Handling accounts of any business is a Herculean task and requires quite a lot of expertise on the part of any accountant or bookkeeper. Due to the lack of time and hurry, many big or small organizations are approaching small business accounting firms, as these are more capable and also offer perfect solutions to any firm’s accounting woes. Moreover, these firms are being preferred upon by large accounting services providers because they provide excellent services than their counterparts. Read the rest of this entry »

Bookkeeping is an essential skill which must be mastered before running a business of your own.  It is not only important for tax returns and calculating the overall tax liability of your business each year, but it is also imperative for cash flow analysis and financial forecasting.

You can employ an accountant to do the job for you, although this is going to be an expensive choice.  It is clearly far better to take the time to master the basics of bookkeeping, largely the double-entry system, to avoid this hassle and expense, and to give you the value of accounting information to expand and consolidate your organization. Read the rest of this entry »

Cash flows , both inflows and outflows are the heartbeat of any business. Various groups of people focus on this. Lenders and investors, business managers and last but not the least, investors. More businesses have failed not due to a lack of profitability but due to a lack of cash.Cash is needed for the day to day operations of a business such as purchasing raw materials, paying expenses, paying interest on loans, taxes etc. Stated simply a cash flow statement tracks the movements of funds. Read the rest of this entry »

GAAP is an acronym for generally accepted accounting principles. Financial statements are usually prepared in accordance with generally accepted accounting principles that have been codified over a period of time. It is the responsibility of the management to prepare the financial statements.CPA will verify that it is in fact prepared in accordance with GAAP and issue a report with their findings. Usually, when you look at an unqualified auditor’s report, one can assume that the financial statements are prepared in accordance with it.

It would result in utter confusion, if businesses were to prepare their financial statements in accordance with its own unique accounting methods. Hence the fundamental idea was to provide a well defined set of rules that all can follow. This would make comparison of the same business over a period of time as well as comparisons with other businesses in the same industry possible. The data would be comparable. In preparation of the financial statements, one has to look at all types of transactions and determine the correct application of accounting principles. Read the rest of this entry »

A previous article, showed the differences between profit and cash flow. Many business people understand the difference, but my previous article highlighted the importance of CASH MANAGEMENT! I will attempt to provide more detail, with regard to cash management, in this latest offering.

The thrust of my articles, attempt to explain the difference between profit and cash. The cash building strategy outlined below, will reflect differently in the books of account of a business. In fact, these reserves will nor reflect on the Profit and Loss/ Income Statement accounts, and yet, it is the most crucial aspect of the finances! Read the rest of this entry »

Astonishing advances in technology and communications have enabled companies to operate in an increasingly global marketplace. As a result, conventional business operating models have been re-evaluated as organisations seek to improve performance, productivity and shareholder value.

Traditional wisdom about retaining finance and accounting functions within an organisation’s own ‘gene pool’ has been challenged. Although these functions were once viewed as part of the core skills set organisations retained, there is a growing awareness that outsourcing could deliver cost savings, without compromising quality or security. Read the rest of this entry »

Dave Packard Chairmen of Hewlett-Packard said “Tell me how a person is measured and I’ll tell you how they will perform.”

Business Metrics are tailored performance measures that promote the strategic goals and objectives of the organiza­tion.

The spectrum of business measurements spans a wide variety of management methods. Traditional financial measures, such as Work in Process (WIP) and piece rates, are rapidly being replaced by time based measures, like Raw and In-Process (RIP) and rate based planning. Read the rest of this entry »

These days’ small business owners have a choice of many quality accounting software programs with numerous undeniable benefits. Accounting software allows a business owner to become more efficient. They are set up so you don’t have to know double entry bookkeeping; and they can produce valuable reports to track your profit and expenses.

While accounting software has many benefits, they still don’t fulfill the needs of the majority of small business owners. I have worked with many small business owners who have spent the entire year tracking their books with their accounting software only to find at the end of the year that is was all wrong. Or worse yet, they had been paying a part-time bookkeeper to do it for them only to learn that the term “bookkeeper” is loosely defined. Tears have been shed, and rightly so. Read the rest of this entry »

Double entry bookkeeping stretches back centuries perhaps even as early as the 12th century and is now accepted worldwide as the accounting standard to be employed by all companies in recording the financial accounting records. The first written explanation of the accounting system was reportedly by a Venetian mathematician Luca Pacioli towards the end of the 15th century. Read the rest of this entry »