Questions tagged [accounting]

for questions that relate to the laws, practices, and products of accounting. Please note that questions about accounting that are academic or have no bearing on personal finance are off-topic here.

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Impairment of goodwill [closed]

I have a question in relation to value in use when testing for goodwill impairment. I know IAS 36 is specific that when testing for impairment you test the asset in its current condition. I was ...
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1 answer
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In a budget do you account for expenses of last month in current month?

If I recieve june's paycheck by june 30th Ill be using that paycheck through out the month of july. In a budget then, should I add june income and july expenses in the same column? thanks
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Cash Flow vs Net Profit in Evaluating Capital Evaluation

In Kaplan's CFA Level 1 online course, it has been claimed that after-tax cash flow-based ratios (NPV) are better than profit-based ratios (ROE, EPS, etc...) in terms of evaluating capital allocation ...
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Is the price-to-book ratio too arbitrary to be useful to investors?

Many financial portal websites show the price-to-book (P/B) ratio of companies. For example, Yahoo Finance shows this P/B ratio for TotalEnergies SE: Under IFRS (IAS 16 — Property, Plant and ...
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11 votes
6 answers
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How do you calculate the depreciation on a car?

I’m thinking of selling my new car. Here are some informations about it. Model: Suzuki XL7 2022 Bought: Brand New, January 2022 (6 months of usage) Initial Price: ~$16600 Mileage: 3100 miles If I’m ...
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1 vote
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Account name: "Asset" vs "Assets" [closed]

I am making a chart of accounts, and wondering if there is any reason (beyond personal preference) to choose: "Asset" over "Assets" (as in "Assets:Checking Account") &...
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1 vote
1 answer
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Accounting question about recording debits & credits

Please consider this simple spreadsheet, which tracks a $1,000 loan that I gave to a friend, along with the friend's payments against that initial loan. type date amount ------------------...
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5 votes
5 answers
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In a Budget is Saving Considered an Expense?

I created a personal budget with a savings section but I'm not sure if it is considered an expense. Is it an expense, and how do I account for it? Thank you all for your great insights. I decided its ...
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0 votes
1 answer
117 views

What type of accounting practice is this and is it good, bad or depends on other circumstances?

QUESTION - I'm looking for a name I can associate with this specific type of accounting practice and whether this would be considered good accounting, bad accounting, doesn't matter, depends, etc? ...
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1 vote
3 answers
67 views

The cost of capital Equity versus Debt

Trying to understand something basic about cost of capital that I can't seem to wrap my head around. When we talking about issuing debt to raise funds for a project, the cost of capital is the ...
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0 votes
1 answer
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How do I structure accounts to represent capital and depreciation for multiple jurisdictions, keeping equity accurate?

I am required to file taxes for my small (sole proprietorship) business and personal finances in two jurisdictions (Canada and the USA, as it happens). I have capital equipment for my business. Both ...
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1 vote
1 answer
152 views

Profit and revenue increased but organic growth decreased made stock decrease 20% in a single day

I was looking at the stock "Sinch". It recently released a bad report according to media. I did not really understand why. I looked up the report and it looked good to me which made me more ...
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6 votes
1 answer
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How do I record a purchase of gas in a gnucash chart of accounts?

Complete beginner here. Eyes sore and brain bent from reading. My question too basic for anyone to answer it seems. It is this: I start off with the new chart of accounts. I spend $50 on gas. How ...
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2 votes
1 answer
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How to track business mileage in GnuCash?

I have a small business which involves some driving to clients using my personal vehicle. I track both my individual auto expenses and my mileage in GNUCash but so far have only been using the ...
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1 vote
1 answer
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How can company show a profit before income tax, but then lose money after income tax?

I am looking at a recent earnings release from Apache Oil. The symbol for Apache Oil is APA. Here is a link to the earnings release: Earnings Release The release (on page 6) shows that the company had ...
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1 vote
1 answer
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Stock Analysis Equation Questions

I am a newer value investor and I am trying to slowly learn. I came across these equations and I am not able to find for sure online or in the books I have available what these abbreviations/acronyms ...
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1 answer
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Is IRR in VC different to IRR in accounting

I am coming from a more accounting background and I always understood as IRR to be a discount rate that would lead to an NPV of a project to zero. That is to say that IRR is how much value money loses ...
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2 votes
2 answers
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What are the accounting rules around payment of dividends for loss making companies (VOD)

Vodafone (LSE:VOD) has been loss making and has negative retained earnings (Accumulated losses). What are the accounting rules that allow Vodafone to pay a dividend - From the UK Government's website: ...
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7 votes
2 answers
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Double entry bookkeeping - Record incoming money which I would hold temporarily as a custodian

My dad's clients often transfer payments, which they owe to my dad, into my bank account [for technical reasons, some payment types into my account are not currently available in my dad's]. After a ...
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Confusion on what goes into Book Value

I've been reading a bit and come upon a bunch of conflicting accounts of what all goes into Book Value. What I was originally taught was that it's total net assets less intangible assets. However, ...
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1 vote
1 answer
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Personnel costs recorded twice in the income statement? [closed]

We are talking about a company that produces its own products. Since the manufacturing costs also include part of the personnel costs, the personnel costs are recorded twice in the income statement. ...
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1 vote
2 answers
89 views

Does WACC apply to founders of a business?

I learned the other day that the Weighted Average Cost of Capital (WACC) is defined as follows: Source: https://en.wikipedia.org/wiki/Weighted_average_cost_of_capital Basically, investors give money ...
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0 answers
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T-accounts for shared rental property

I recently bought a vacation property with two friends that we intend to use part-time and rent part-time. All three of us are on the deed and mortgage. Equity, income and debt are all split equally ...
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2 answers
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What's the difference between "Net Sales", "Total Revenue", and "Gross Sales"?

What's the difference between "Net Sales", "Total Revenue", and "Gross Sales"? From what I have found, Gross Sales = the sum of all receipts Net Sales = Gross Sales - ...
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0 votes
1 answer
64 views

How does a balance sheet look when almost all income is immediately drawn?

I have a small business and I am being asked to produce a balance sheet. I have a very simple business model: I do hourly work and get paid on a 1099 basis. It is an LLC but I treat it kind of ...
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2 votes
0 answers
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Double-entry accounting example for Christmas gift from family member

A family member, Sandra, pays $10 as a Christmas gift for Joe's daughter, Anne. Joe is learning accounting and records the entry as follows. Joe wants to check if the following entries are correct or ...
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1 answer
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How should I classify a loan with less than 12 months left when constructing personal financial statements?

If I have a loan that I will finish repaying over the next 5 months (original tenure is 5 years so I've paid 55 monthly repayments already), if I'm constructing a financial statement today, does this ...
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2 votes
2 answers
151 views

Is there a standard for the "transaction type"?

After designing and using my personal bookkeeping system for quite some time, I realized that it lacks one column: what "type" of transaction it is. I have made it a smallint called type ...
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2 votes
1 answer
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How to account for a stock spinoff in an investment account

I recently obtained shares of Sylvamo Corp (SLVM) as a result of a spinoff from International Paper (IP). In the transaction history of the containing brokerage account there was no intermediate ...
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-1 votes
1 answer
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Does a public company's tax comes from financial reports? [duplicate]

I'm studying financial reports. There is a section on Yahoo Finance that contains gross profit, net income, total revenue, etc.. How does a company know how much tax it should pay? Is it based only ...
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-3 votes
2 answers
160 views

How do banks balance the books after a borrower defaults on loan repayment? [closed]

Buyer gets a 10k loan to buy a tractor from Seller. In the banks' books: Buyer Assets Liabilities 10k deposit 10k repayment later Bank Assets Liabilities 10k repayment later 10k deposit for Buyer ...
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0 votes
2 answers
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Is the way I'm calculating depreciation on my rental property correct?

I've recently purchased an out of state rental property. I'd like to be ahead of the game and fully grasp the concept of depreciation so that when tax season comes around, I won't be clueless. I've ...
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0 votes
1 answer
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Sales Discount Journal Entry [closed]

I have this problem that I have found difficult to solve. First am not a professional accountant so it might be a bit obvious to accountants bear with me. I will explain the question with an example ...
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1 vote
1 answer
51 views

Inventory turns formula doesn't seem to give intuitive results [closed]

In this image, I purchase $100 worth of inventory, sell all of it, purchase another $100 worth, and sell all of that (in some time period). This looks like it should equal 2 turns: However, using ...
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2 votes
0 answers
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Items bought for staff to work remotely, kept by staff [closed]

I volunteer for a small US-registered non-profit (almost all activities are conducted outside the US, but I'm asking about US accounting). We're trying to record some expenses and are unsure what we ...
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1 vote
1 answer
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Calculating Earnings per Share for Berkshire Hathaway

I am looking at page 5 of the following earnings release: Form 10-Q (Q2 2021) I want to calculate the earnings per B-Share. I do this with the following calculations: 28094e6 / ( 1519576*1500 + ...
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3 votes
1 answer
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Do convertible preferred shares increase common equity when converted?

Do convertible preferred shares increase common equity (increase the ratio of common equity to preferred equity) when converted? For example there $4m in shareholders equity and there are 4 shares, 2 ...
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1 vote
1 answer
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When budgeting how do you take into account that some income is bi-weekly yet some expenses are on a specific day of the month?

I'm tackling a problem with budgeting in that I'm unsure if I should be making a budget from my weekly/monthly/yearly expenses and income. My income is paid bi-weekly on Friday but I have rent and ...
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0 votes
1 answer
72 views

Treasury stock and the Accounting equation [closed]

What happens to assets and liabilities when treasury stock is cancelled after a buy back? A - L = E When treasury stock is cancelled it encreases equity and for the equation to balance something must ...
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1 vote
0 answers
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What expense account is recommended for prepaid expenses where services were never received? [closed]

Our small business prepaid a contracting agency (software development) to complete some work for us. We booked the A/P accrual against the assets prepaid expenses account, since that's what we would ...
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1 vote
1 answer
128 views

What is company capitalization?

I was reading up on some investment agreements and I came upon the following paragraph from one of the agreements: If there is a Coin or Token Sale before the expiration or termination of this ...
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1 vote
3 answers
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Trying to understand the difference in 2 scenarios of gifting property

I'm in the US. I have 2 different scenarios related to gifting of a property and I'm trying to understand why scenario 1 feels legal and scenario 2 feels illegal. I can't put my finger on the ...
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3 votes
2 answers
106 views

Accounting/legal service for small part-time consultant

I am starting part-time consulting in the U.S. on the side of my full-time job, mostly for fun (programming and web development). So far, I only completed one project and although I am marketing ...
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1 vote
2 answers
161 views

Why are warrant liabilities considered a financial loss?

If a company says they lost $2M in Q1 because of: "non-cash mark-to-market increase in warrant liabilities" As I understand warrants, they allow the holder to purchase the shares at the ...
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1 vote
1 answer
120 views

Which countries do not meet the US accounting standard?

I know Chinese companies do not meet the US accounting standard and do not accept auditing from the American Accounting Association. But how about other countries, such as Russia and Colombia? Besides ...
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1 vote
1 answer
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Why are Apple's fiscal year quarters (Q1, Q2 etc.) one quarter ahead than usual? [duplicate]

Apple has just released its Second Quarter Results. They appear to define their "second" quarter (Q2) of 2021 as ending at the end of March, and their "first" quarter (Q1) of 2021 ...
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1 vote
1 answer
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Would shipping costs count as COGS? [closed]

I'm coming from non-accounting and non-finance backgrounds. I need help in form of understanding through a question. When a company sends items to club members but is charged for shipping fees from a ...
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1 vote
2 answers
123 views

Can long-term assets ruin the balance in the balance-sheet?

I'm coming from non-accounting and non-finance backgrounds. I need help in form of understanding through a question. I want to ask about something related to the balance of a balance-sheet. ...
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1 vote
1 answer
155 views

Net Asset Value for Shares in Startup

Assume a situation where an employee of a privately-held startup exercises a share option and receives 1 share and decides to leave. Per the option agreement the company has an 'option' to purchase ...
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2 votes
2 answers
124 views

How to track money used for shared expenses against a personal loan?

I've recently (3 months ago as of writing this) got into proper double entry bookkeeping for my personal finances. I've been using GnuCash, though this pertains more to double entry practices than ...
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