What are leasehold improvements and how do we record them? We’ve talked about capital improvements. Click here to read about improvements made to a property that you own. But what if you’re renting your facility? Or if you’re the landlord that made improvements to a property for a tenant? You should capitalize improvements to the …
How do you record the sale of an asset in your bookkeeping software? Did you sell your truck for a profit? Dispose of equipment at a loss? Do you know how to record that in your bookkeeping software? The asset and its depreciation should be up to date before entering the journal entry to record …
Your profit and loss should be set up for you. The list should be understandable and organized so that you can understand it easily. Your categories should be understandable to you. No secret codes here. And no doubling up, either. If you accidently list the same category (account) twice, then hide one of them. The …
A capital improvement is a renovation or addition to property that is recorded as a fixed asset itself. There are certain criteria that the improvements must meet to be categorized as an asset. Let’s look at them here: The first consideration is your business’s policy for capitalization (categorizing a cost as an asset instead of …
Did you loan your employee money? You can deduct the payments from their paycheck. But be careful to record it all properly. Set up the employee loan first. The loan account will be a current asset. Let’s just call it employee loan. To record the initial payment of funds to the employee you would debit …
COGS (cost of goods sold), cost of sales, direct cost, or job cost all mean the same thing. Although it is usually self-explanatory, sometimes COGS is mislabeled as expense. So, let’s take a closer look. We say anything the customer takes with them or that we leave with the customer is COGS. Inventory is the …
Zero-dollar bills don’t seem to be worth much; but they’re handy for some transactions. It’s a good tool to have in your belt. Let’s say you purchased an item for a job; the charge has already been applied to the job; and then you discover a defective item. You receive a credit from your vendor; …
Sometimes it’s obvious whether something is an asset or an expense. A car is an asset; paper clips are an expense. But what about those lower priced but important items? How about a laptop? That new drill? An asset is an item used in the operation of the business for at least a year or …