Phoenix Arizona CPA | Arizona Tax Accountant | Arizona Income Tax

One of the fundamental accounting principles is matching revenue with cost in any period. This is relatively simpler while dealing with items in cost of goods sold, such as purchase of raw materials, supplies, and cost incurred in conversion to finished goods for sale etc. But this becomes more complex while dealing with assets that have longer lives. There are two different types of fixed assets that a company invests in, tangibles and intangibles. Tangible fixed assets are assets such as Buildings, Plant and equipment that have nearly definite lives. In most cases the value of the fixed assets also depreciates over time. At the end of its useful life assets may have a salvage value. This is true for plant and machinery but not for buildings. Although the value of the buildings might increase from year to year, GAAP requires that depreciation be calculated and accounted as an expense. Read the rest of this entry »

Understanding Financial Statements. The term financial statements refer to a complete set of statements that include an income statement, a balance sheet and a cash flow statement. The Income statement (sometimes also called the Profit and Loss statement or P & L accounts) reflects the profit performance of a business. This statement summarizes sales revenue and expenses and reports on the profit for a period. The foremost thing to understand is whether the business has made a profit or loss and if so how much? Profit or loss is also usually determined for a specific period whether it be a month, quarter, half year or year. Read the rest of this entry »

No matter what the size of your business, one truth remains: cash flow is king. It’s the lifeblood of your business. Yet, while most small business owners know this truth, many still struggle with basic cash flow definitions, fundamentals or management strategies that actually maximize benefits. In today’s uncertain economy, characterized by frequent market fluctuations and ever rising interest rates, many small businesses with limited financial knowledge are struggling to stay alive, let alone thrive. So why is poor cash flow management such a large killer of small businesses? Here are the two main reasons: Read the rest of this entry »

Accounting or bookkeeping is one of the most crucial aspects of any business. Whatever the size of the business is, accuracy of the accounting books is very important. A known fact is that it is the accounts department of a business that has the capability of deciding the stand of the business in the market and giving the business the status of a profit-making firm or a loss-making firm. Therefore, it is crucial that the professionals who are hired for this particular department are well qualified and have a good hold on the various aspects of accounting. It is a huge thing and includes many things and calculations that need a lot of expertise on the part of the person who is taking care of the entries. It is very important that each entry is very carefully done because one small mistake can lead to a big problem. However, at times, it becomes quite problematic and in such adverse situations, the best thing to do is to take help of the accounting outsourcing service. Read the rest of this entry »

A known fact in the corporate or the business world is that the accountancy department of any firm or organization is the most vital department. When a business is set up, the person setting up the business thinks about the profits that the firm might make in the future. A successfully running business thinks about making more profits, so that the horizon can be further expanded and the business can further grow. A loss-making firm thinks about turning into a profit-making firm because if it does not happen like that, then the business might have to be shut down. All these concepts of earning more revenue and incurring fewer losses are completely dependent on the accountancy department of a firm. It is this very department of an organization that can help business come out with flying colors. Therefore, a very important decision is to appoint professional accountants who are thorough with their work and can provide the firm with the best financial decisions. However, at times it becomes quite problematic to get all the accountancy work done by the in-house professionals and therefore, one looks out for accounting help. Read the rest of this entry »

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 »

Can you do your accounting the old fashioned way with a ledger book? Yes, you can, but with all the accounting software out there, why would you?

In general, you probably wouldn’t, but I do know of a number of small businesses that have tracked their accounts in Excel for the first few years while waiting for the company to generate enough cash to buy an accounting package.

I don’t recommend this strategy because basic accounting software is not that expensive and keeping appropriate track of your accounts is important for your business. Keeping a good account allows you to track your profitability by customer, allows you to understand how your employees spend their time, and allows you to understand how your marketing dollars drive your sales. 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 »