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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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
4k views

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
116 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
65 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
38 views

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
620 views

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
180 views

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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0 votes
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
55 views

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
3k views

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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0 votes
0 answers
48 views

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
75 views

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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0 votes
2 answers
86 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 votes
0 answers
46 views

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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0 votes
2 answers
110 views

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
63 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
88 views

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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0 votes
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
401 views

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
50 views

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
86 views

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
47 views

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
95 views

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
123 views

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
77 views

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
111 views

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
70 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
37 views

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
130 views

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
156 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
118 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
68 views

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
129 views

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
122 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
151 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
118 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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0 votes
1 answer
60 views

Goodwill and Amoritization when buying a small business [closed]

When buying certain small businesses goodwill is the largest intangible asset. For an example company, Purchase Price: 1,000,000 Tangible assets: 200,000 Goodwill: 800,000 If the company's value stays ...
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0 votes
1 answer
59 views

What to deduct first from the discount? Is it the percentage or amount?

How to calculate a discount which have both deductions using Percentage and Amount at the same time. For e.g. Total Amount is 60,000 where I want 10% and 1,500 Discount. So if we deduct the 1,500 from ...
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-1 votes
1 answer
66 views

Double entry accounting - asset account [closed]

I understand a loan account of a customer is an asset account of the bank. A credit to loan account by bank decreases asset account. According to double entry accounting for every credit there should ...
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1 vote
0 answers
114 views

How to record personal portfolio appreciation?

I'd like to know how to record for the appreciation of my investment portfolio. The idea of not recording it; and then recording it as revenue once I sell it seems a bit off to me. I plan to hold my ...
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1 vote
1 answer
70 views

How can charges against company surplus be used to reduce a goodwill account?

I am presently reading the second edition of Security Analysis by Benjamin Graham. In chapter 29, "The Dividend Factor in Common-Stock Analysis", to illustrate the relationship between ...
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0 votes
1 answer
86 views

How does an accountant estimate the salvage value of an asset when calculating depreciation? [closed]

I'm studying the very basics of accounting, so bear with me please :) When calculating depreciation using the straight line method for example, one takes the cost of the asset, estimates the salvage ...
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