Accounting helps small business owners to gauge what happens inside their business so they can make better financial decisions and helps to keep their records in order to meet legal requirements. In this section, you’ll find all the essential accounting guides for Limited Company Directors and the self-employed about accounting, keeping records and reporting requirements.
Popular Accounting Guides:
The debtors day ratio is the average number of days it takes for a business to collect cash owed by its customers. How is Debtors Day Ratio Calculated Debtors Days = Trade Debtors/Annual Turnover *365 How is Monthly Debtors Day Ratio Calculated Debtors Days = Trade Debtors/Monthly Turnover *30 Why is the Debtors Day Ratio … Read more
Understand what is considered an asset in accounting, see some examples of assets and find out how they appear on the balance sheet.
What are Current Assets? Current Assets are items on the balance sheet that are either cash or readily convertible into cash, usually within one year of the balance sheet date. The Current Assets Are Shown on the Balance Sheet Current assets are included on the balance sheet, below fixed assets if the company owns any. … Read more
EBITDA stands for earnings before interest, tax, depreciation and amortisation. It can sound more confusing than it really is, but understanding what EBITDA is is actually fairly straightforward. What is EBITDA? It is a profitability KPI commonly used by analysts and investors. It allows them to company Businesses profitability by stripping out financing costs, accounting … Read more
When you run a business, reviewing key financial metrics is vital to monitoring your business health. Having a handle on your gross profit margin will give you a feel for how your business is performing and it is making enough profit to cover its overheads and even pay your salary. What is Gross Profit? Gross … Read more
Do you need to know what is gross profit? Often, jargon confuses people but in this article, I’ll outline the essentials you need to know. Gross profit is a measure of profitability. In addition, it’s the amount of profit a business makes after deducting all the costs of associated with delivering a service or product … Read more
Websites can be expensive – design, content, development all come with a cost. So its worth understanding if your website is a fixed asset. Treating your website as a fixed asset means the cost is capitalised on the balance and amortised over a number of years. This strengthens your balance sheet position and means the … Read more
A prepayment is an accounting adjustment made for costs that have been billed or paid for in one accounting period but relate to another. Accounts are prepared using the matching principle whereby revenue for a specific period must be matched with all the related costs for that period. If you receive a bill in one financial … Read more
Understand the meaning of an accrual in accounting, why they are needed and see some examples of accruals along with the double-entry.
The double entry for payroll can be a tricky journal to get right. Here’s the double entry for payroll and the subsequent payment of net wages and PAYE to HMRC. What is a Journal Entry Journal entries are used in bookkeeping to reflect the costs and liabilities of a business. Some costs can be recorded … Read more
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