Independent Variable Definition and Examples

Researchers must ensure that participants provide informed consent and that their privacy and confidentiality are respected. Additionally, it is important to avoid manipulating independent variables in ways that could cause harm or discomfort to participants. To ensure cause and effect are established, it is important that we identify exactly how the independent and dependent variables […]

What Is the Average Cost Method? How To Calculate & Example

First-In, First-Out (FIFO) is one of the most commonly used methods used to calculate the value of inventory and cost of goods sold (COGS) during an accounting period. The FIFO Method assumes that inventory purchased or manufactured first is sold first and that the newest inventory remains unsold. So the cost of the older inventory […]

How to record the dividend declared and paid

(Both methods are acceptable.) The Dividends account is then closed to Retained Earnings at the end of the fiscal year. Suppose a corporation currently has 100,000 common shares outstanding with a par value of $10. Dividends declared account is a temporary contra account to retained earnings. The balance in this account will be transferred to […]

How to Calculate Bad Debt Expenses?

There is no allowance, and only one entry needs to be posted for the entry receivable to be written off. Bad debt expenses are classified as operating costs, and you can usually find them on your business’ income statement under selling, general & administrative costs (SG&A). Usually, the longer a receivable is past due, the […]

Automatic Bill Payment: What It Is And How It Works

When you have automatic payments, you take that thinking away from yourself and your bills are paid on time, every month. Qualifying accounts can even access their paycheck up to two days early. There is also the risk that comes with “out of sight, out of mind” – if you stop being hands-on with your […]

What is liquidity?

In the example above, the rare book collector’s assets are relatively illiquid and would probably not be worth their full value of $1,000 in a pinch. In investment terms, assessing accounting liquidity means comparing liquid assets to current liabilities, or financial obligations that come due within one year. For example, internal analysis regarding liquidity ratios involves […]

Bookkeeping & Beyond, LLC Bookkeeping, QuickBooks & Management

With the example above, the income from that project would be taxed in 2020 even though you won’t receive it until 2021 under the accrual method. With the cash method, the income would be taxed in 2021 when it actually hits your books. Each state has unique tax requirements for LLCs, including franchise taxes, gross receipts taxes, and […]

Allowance For Uncollectible Accounts

You’ll notice the allowance account has a natural credit balance and will increase when credited. For example, a company has $70,000 of accounts receivable less than 30 days outstanding and $30,000 of accounts receivable more than 30 days outstanding. Based on previous experience, 1% of accounts receivable less than 30 days old will be uncollectible, […]