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Monday, September 22, 2008
What is the rule of 72?The rule of 72 is a simple formula that tells you the approximate amount of time or interest rate needed for an amount to
double. The formula is years X Rate per year = 72.
8:30 am mdt
Monday, September 15, 2008
What is the entry when a company lends money to an employee?When a company lends cash to one of its employees, the entry will include a credit to cash and a debit to an asset account
such as Notes Receivable from Employees (if a promissory note is involved) or (other Receivable) Advances to Employees (no
note involved.)
11:42 am mdt
Friday, September 12, 2008
How do drawings effect the Financial Statement?Drawings or withdrawals by a sole proprietor will effect the company's balance sheet through the reduction of the asset
withdrawn (usually cash) and the reduction in owner's equity. A draw of cash will also be reported in financing
activities section of the statement of cash flows. The income statement is not affected by the owner's draw.
12:14 pm mdt
Tuesday, September 9, 2008
What is reported as Property, plant and equipment?Property, Plant and Equipment is the long term or noncurrent asset section of the balance sheet. Included in this classification
are land, buildings, machinery, office equipment, vehicles, furniture and fixtures used in a business. Also include
in property plant and equipment is the accumulated depreciaton for these assets (except Land, which is not depreciated.)
7:23 pm mdt
Sunday, September 7, 2008
What is the Chart of Accounts?The chart of accounts is a listing of the general ledger accounts to which amounts can be posted. The chart of accounts
is a helpful tool for identifying the best account for recording a transaction.
Usually, the chart of accounts
begin with the balance sheet accounts followed by the income statement accounts. The accounts will usually be in the
same order as they ar presented on the two financial statements.
5:46 pm mdt
Should an accountant sign Client business checksNo, and the reason is that by signing a check you will become liable for this transaction and others.
5:00 pm mdt
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