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
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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:
Im Unemployed! 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 A Six-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